Market Update: Energy Procurement – October 2017
The summer that just won’t end! How will the warmest start to Q4 on record effect energy prices
During my weekly visit to Costco, I was shocked to see the newly organized Christmas display. With that came an instant reality check that, yes, we are into Q4. Although it doesn’t even feel a bit like Halloween, it is my favorite time of the year; BUDGET TIME! Yes, it’s time to get off the beach and break out the spreadsheets! Your company must consider the impact of these natural disasters on energy prices into their budget.
Weathers Effect on Energy Prices
While this extension of the summer allows for beach weekends, the potential impact on future energy rates may catch many decision makers off guard. To date, the market has weathered three major hurricanes without a hint of increased volatility. This fall has been one of the most active hurricane seasons in decades, which could be setting the market up for a volatile winter season.
Hot and humid temperatures are keeping the AC systems cranking leading to much higher seasonal demand for generation. This has limited the natural gas storage injection build quietly eliminating the surplus that has existed for years. This is occurring at a time when the slope of the demand growth curve is steeping. All things being equal, with the strong growth in non-space heating demand, even an average winter which is what is currently being forecasted, there is the potential for a measurable tightening in the balance of supply & demand. Throw in a Polar Vortex or two and we could revisit the budget busting volatility seen in 2015.
Plan Ahead to Ensure no Budget Surprises
Don’t panic, the scenario we just laid out is the worst case. Call NJGEC today for a complimentary Pre-Budget utility bill and 3rd party supply contract audit that will not only address potential market exposure it will accurately project your 2018 budget by accounting for upcoming tariff adjustments and other potential utility increases that often get unaccounted for.