EnergyWindow MarketElert ^TM - November 2004
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Ready...Aim...Fire?
The unparalleled run-up in natural gas futures prices of the past two months seems to have finally responded to record storage levels, production restoration and the end of the American political prize-fight, leading some gas users to wonder - is it time to trigger?

Storage is now above 3.3 trillion Bcf for the first time ever since reporting began, and prices on the NYMEX exchange have moved from a high above $8.00 for a 12-month strip to just around $7.00. Winter prices that cleared $10.00 just three weeks ago now hover in the high $7.00 range. Some analysts believe the trend will continue, but others point to the potential for more turmoil in the Middle East, an expanding economy, a cold winter and lingering production outages in the gulf as reasons to pressure crude prices, increase demand and tighten supply.

Natural gas end-users that have taken out basis contracts or have remained on a month-to-month contract should carefully consider locking in their winter gas. Historical projections suggest that the current market may soften over the course of the next few years*, but recent experience serves to remind us once again that the only truly accurate picture can be found in the rearview mirror.

As for the impact of gas futures prices on electricity, be prepared to move in markets such as Duquesne, Washington DC, & Massachusetts as wholesale prices open up headroom there.

For more information on natural gas price trends you may want to check out a list of analyses available at EIA Natural Gas Analysis Reports Page.

*Gas Price Trends based on 12-month strip historical settle through 2003, projected balance of 2004-2005 based on NYMEX futures as of 11-12-04. 2006-2009 based on 2005 projections adjusted for average increase 1990-2004.


November Elerts

• Massachusetts - Standard Offer service (fixed regulated rates) is ending at the end of February 2005. All customers on Standard Offer service will automatically be placed on Default Service - meaning a hefty increase in electric rates. More at Massachusetts Default Rate Page.
• Washington DC - New Standard Offer rates are all but finalized in DC, and will result in stiff increase for customers in the capital. New rates create shopping credits in the low 7 cent per kWh range for many end-users. Shoppers can switch as of February 8, 2005. More on DC Standard Offer Service at DC SOS Page.
• Allegheny in MD - Generation rates for end-users will rise approximately 70% for Type III customers (>600 kW) and 55% or so for Type II beginning on January 1st, 2005 in Potomac Edison territory. Suppliers report savings are generally available for the Type IIIs.
• Duquesne in PA - Customers will be switched over to a new default service (either hourly or fixed depending upon their rate class) on January 1, 2005. Customers switching in January will be subject to the new rate until their scheduled meter read. Suppliers report savings widely available among GL, GLH, and L, with some saying the GS/GM classes can also save on fixed contracts.