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EnergyWindow MarketElert TM - August 2004
www.energywindow.com

August Elerts
Energy Futures Trends

  • FERC Approves MISO - FERC conditionally approved the Midwest ISO's proposed Open Access Transmission and energy markets tariffs on August 9th, paving the way for LMP-based markets similar to those in PJM, New York and New England. The 15-state region extends from Manitoba to Missouri. Order is at FERC 108.
  • LIPA Heats Up - Competitive Suppliers have begun to more aggressively seek retail customers in LIPA (Long Island Power Authority) territory. There are currently three ESCOs serving customers there and three more are waiting for their licenses. Savings in LIPA are based on elimination of tax on delivery charges.
  • Texas Still Hot - Retail customers in the Lone Star state are still reporting savings of 25% or better based on current Price-to-Beat Rates, partly as a result of recent rate increases in Both CPL and WTU. These are in addition to Oncor earlier this month and TNMP and HLP in July. Staying with the Price-to-Beat doesn't pay these days. Link to the PUC site rate page is PUCT Rates.
  • Auction for AC in DC - Pepco Holdings has issued requests for proposals for a total of 1,425 MW to supply standard offer or default service to residential and commercial customers that do not select retail electric suppliers after January 1, 2005. The move may revive a dormant competitive market in the Capital, especially if administrative charges similar to those in Maryland are adopted. Full details at Pepco Release.

"Non-Stop" Shopping May Mark Retail Electric Future
Utility gas prices typically change quarterly or monthly. Until recently, that wasn't the case in electricity. Now Maine is cutting the term of their standard offer service from one year to six months in order to more closely track the wholesale market. Massachusetts has already shortened the term of their variable default electric service for industrial customers from six months to three, and their Standard Offer rates will disappear in March of next year. New York ratepayers have been paying variable wholesale-based electric rates for years, and markets in New Jersey and Maryland are now set by competitive auctions, reflective of wholesale rates. Larger customers in these and other states are increasingly finding themselves placed on market-based rates.

Energy buyers used to making decisions to switch to third-party suppliers, based on savings derived from fixed price rates, are realizing that the future will be more challenging in determining the value of competitive contracts. Guaranteed savings may come only with variable-price contracts, and fixed prices will increasingly need to be judged against a moving utility benchmark. This phenomenon, coupled with volatility and rising prices, makes it critical for buyers to keep a weather eye on tariff changes, wholesale indices and overall pricing trends.

So what's a buyer to do? Click here for the expanded article.

Quick Buyers' Tip
Wholesale price indices are available from a number of online sources and from the DOE, trade groups, regulatory boards and many private-sector companies. These may provide free information on energy trends and pricing, but gathering and interpreting this information and matching it to your company's risk profile can be daunting. Many buyers that are stretched to their limits, however, are outsourcing this function to consultants and procurement experts whose cost is essentially shared over a number of clients.


Energy e-Procurement Offers Substantial Financial Returns
E-procurement isn't just about maintenance supplies and high-turnover consumables anymore. Find out why energy's time has come and see how the return on investment is hard to beat.

Natural Gas Price Trends and Practical Strategies for Managing Escalating Supply Costs
This white paper explores what the experts are saying and offers strategies for finding savings.

"Natural Gas Outlook Webinar". Available on CD-ROM
The interactive, Web-based seminar, featuring natural gas experts Andy Weissman, John Wood, and Dr. Tom Woods is now available for purchase on CD-ROM. Click here for more information.

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