Competitive Energy Services
Energy Seminar
Dartmouth College
Presented by Jon F Sorenson, President and COO
March 21, 2013
www.competitive-energy.com
866.408.4591
2
Competitive Energy Services
3

Independent energy services firm

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Over 800 clients
From California to Northeast Atlantic, Canada
Supplier neutral, product neutral


Transparent Fees



Over 50+ suppliers North American wide
All fees and services – defined, agreed upon
Customized Energy Solutions
Always working on behalf of our clients

Go above and beyond the customer’s expectations!
North America – Natural Gas Open and
Power in highlighted States
CES Services
4

Market expertise: monitoring, procurement
 Electricity
 Natural gas
 Liquid fuels: propane, biofuels,
heating oil, diesel, residual (heavy)
 Bio-mass: chips and pellets
 Load/Demand response programs
 Reduce tag – make revenue
 Renewable Energy Credits (RECs)
CES Services
5
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Conduct bid process, analysis and contract negotiation
Energy forecasting, hedging strategies
Natural gas nomination and scheduling
Utility bill analysis, audit and negotiations
Conversion analysis for equipment upgrades and/or
commodity changes
Product development and analysis
Renewable energy management
Generation assessment
Grant assistance
Project management
CES Services: Customized
6

No “Typical” Strategy
Understand Client’s risk tolerance and existing hedges
 Locked vs. open positions across all fuels

Daily liquidity vs futures market
 How much product and/or dollars at risk?


Timing of budgets, outlook term


Monitoring, Assessment, etc
Best-fit product options

Designed and customized by client
CES Professionals
7

Consult, design, build and operate renewable technologies
Wind and Solar
CES Professionals
8

Six person analytical team

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Bloomberg terminal


Screens and updates on the belt
Intercontinental Exchange (ICE)


Focused on markets, analysis, details, granularity
Hourly and daily reads and views
Custom database

Specific to CES and its customers
CES Clients
9

800+ Clients

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Municipalities & Government
Manufacturing & Industrial
Healthcare Facilities
Education –all levels
Hospitality
Wholesale & Retail
Commercial & Financial
Property Management
Media & Broadcasting


Over a billion dollars in
annual commodity value for
our clients; more than “double
in all energy/utility charges"
We work with clients of all
sizes from small (250,000
kWh or 5,000 Dth) to large
500,000,000+ kWh or
10,000,000 Dth)
Selected Higher Education Clients
10
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Bowdoin College
Husson University
Maine Maritime Academy
University of Maine
University of Southern Maine
U Maine Farmington
Dartmouth College
Rivier University
Amherst College
College of Our Lady of the Elms




Northern Essex Community College
Springfield Tech Community College
Wheaton College
University of Mass System
 U Mass Amherst
 U Mass Boston
 U Mass Dartmouth
 U Mass Lowell
 U Mass Medical Center
CES Client Highlight:
University of Maine & USM
11

System Statistics

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
UMaine Orono


70 million kWh
640,000 MMBtu
Propane, ULSD, #2 & # 6 oil
20,000 students
Client since 2003
University of Southern ME

Client since 2009

Selected Projects:

Landfill Gas


Natural Gas Conversion


lead negotiator on potential 7 mile $13
million pipeline
negotiated improvements in local pipeline
network and secured grant money that
allowed conversion at USM
Cogeneration Studies & Negotiations
CES Client Highlight:
University of Massachusetts
12

System Statistics

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

230 million kWh
3.3 million MMBtu
Propane, ULSD, #2 & # 6 oil
70,000 students, 17,000 staff
Amherst – 16.5 MW Cogen
Boston – 44 mil KWh
Dartmouth – 2.8 MW Cogen
Lowell – 45 mil KWh
Medical – 17.5 MW Cogen

Selected Projects:




Utility Tracker & Budgeting
Liquefied Natural Gas At Amherst
System RFP for solar net metering
credits. Up to 50 MW ($200 million)
in new solar capacity. Savings of
$40 million (on T&D costs) over 20
years.
Bill Pay Service at Lowell and
expanding to all five campuses
CES Client Highlight:
The Jackson Laboratory
13

Client Since 2006

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
Bar Harbor & Ellsworth, Maine
Sacramento, California
Farmington, Connecticut

Selected Projects:

New Wood Pellet Boiler house
and system


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

Saved customer $1.7 million in
project evaluation and analysis
Negotiated first 5 year fixed price
contract for wood pellets
Qualifying backpressure turbine
for Class 1 RECs
Negotiating efficiency incentives
for new CT facility
Fuel Cell and LREC evaluation
for new CT facility
Selected Projects: Cogeneration
14

CES helps many organizations optimize
the operation of their CHP plants,
including:

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
Molycorp Minerals (60 MW)
Madison Paper (40 MW)
UMass Amherst (16.5 MW)
UMass Medical (17.5 MW)
Eastern Maine Medical Center (4.5 MW)
UMass Dartmouth (1.6 MW)
Amherst College (1.25 MW)
Bowdoin College (0.65 MW)
University of Maine (0.6 MW)
UMass Amherst CHP
Selected Projects: LNG
15

LNG Projects
 Hutahmaki
 Madison
Paper
 Molycorp
 UMass – Amherst
Selected Industrial Clients
16
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Huhtamaki/Chinet Co.
Madison Paper
Pride Sports
Molycorp Minerals
Pratt & Whitney
Old Town Canoe
Oakhurst Dairy
Volk Packaging Corp.
Hancock Lumber

CES Services include

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Procurement
Demand Response
Daily Fuel Arbitrage
Load Response Programs
Hedging vs. Open position


Strike Prices
Lead Participant

Bidding and scheduling power
sales from hydro & steam turbine
generation into RT and DA power
markets of NEPOOL
Selected Healthcare Clients
17
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Eastern Maine Healthcare System
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Cottage Hospital
Covenant Health System
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St. Mary’s Regional Medical Center
Harrington Memorial Hospital
Heywood Memorial Hospital
Maine Health
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Eastern Maine Medical Center
Inland Hospital
Maine Medical Center
MaineGeneral Medical Center
Southern Maine Medical Center
Martin’s Point Healthcare
York Hospital
CES Services include:
 Energy Risk Management
 Risk Tolerance Assessment
 Market Intelligence
 Hedging Strategies
 Hedged vs. Open Positions
 Strike Prices
 Energy Budget Design


All energy components
All commodities
Energy Segment
18
Oil
Crude Oil – NYMEX Futures
19
Recent Peak
@ $96 per bbl
Crude Oil – NYMEX Futures
20
Recent Peak
@ $118
per bbl
Oil Markets
21
Oil Market
Crude Oil - WTI & Brent
12-Month Forward Strips, past 24 months
130
Heating Oil & Gasoline
NYMEX 12-Month Forward Strips, past 24 months
3.5
120
NYMEX WTI
12 month strip, $/bbl
date
change from last close
WTI STORAGE (in million bbls)
domestic stocks as of 3/1/2013
gain / loss from previous week
comparison to historic range
crude oil
381.4
3.9
above
NYMEX Heating Oil
12 month strip, $/gal
date
change from last close
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Mar-11
Feb-13
Oct-12
Jul-12
Apr-12
last close previous week 24-month high 24-month low
$92.33
$91.41
$114.41
$77.00
3/8/13
3/1/13
4/29/11
10/4/11
1.0%
-25.2%
2%
Jan-12
Heating Oil
Gasoline
2.0
Jan-12
Mar-11
70
Sep-11
80
2.5
Nov-11
WTI
Brent
Sep-11
90
Jul-11
100
May-11
$/gal
3.0
Jun-11
$/Barrel
110
last close previous week 24-month high24-month low
$3.01
$2.96
$3.37
$2.55
3/8/13
3/1/13
4/8/11
6/21/12
1.6%
-97%
-96%
STORAGE (in million bbls)
domestic stocks as of
3/1/2013
gain / loss from previous week
comparison to historic range
distillate
120.4
-3.8
within
propane
45.7
-2.2
above
gasoline
227.9
-0.6
within
Crude Oil Futures –Monthly Contracts
22
Crude Oil Futures – Monthly Contracts
23
Crude Oil Futures –Front Month
24
Heating Oil Futures –Front Month
25
Shale Oil
26
Keystone Oil Pipeline
27

Links growing crude oil supply with US refiners

“Keystone” in service
600,000 Bbl/day

“XL” under regulatory review (36 months now),
roughly
700,000 Bbl/day “new”

1.3 Million Bbl/day total system

Critical energy infrastructure creating critically
needed jobs

Keystone XL will create $20 billion of stimulus

Keystone XL has the ability to reduce US reliance
on OPEC crude by 40%
Oil Issues Fundamentals Vs. Technicals
28
 How much are the financial
markets driving prices?




Dollar Value


How much per bbl of oil?
Other currencies

Euro
Speculators

Taking positions on both sides of
the market
Hedge Funds, Pension Funds

Positions on oil and commodities
instead of monetary based funds
Fundamentals or Financial?

Both
US Dollar vs Euro
29
US Dollar
Strengthening
Against the
EURO since
Feb 1.
Oil Markets – Now!!
30
 What is causing high oil prices?





Unrest, Fear, Stress, Speculation
Japan – reconstruction, power replacements
South America demand for refined products
Middle East – Syria, Iran, Libya
Europe – Greece, Spain and Italy - economy

Fundamentals
 Excess capacity 3 or 6 million bbls per
day??
 Crude stocks are high; WTI land locked
 What is confusing?
 Technicals



Economy
Currency
Premium for Brent.
Oil Conclusion
31




Oil Fundamentals Point to Lower Prices
Fundamentals have been secondary to financial,
technical and geopolitical considerations.
Prevailing issues – Shale Oil, Key Stone Pipeline,
Enbridge’s SeaWay Pipeline, Geo-Politics
The big questions is when? How long to wait and
when to lock as prices start to decline.
Energy Segment
32
Natural Gas
BTU Comparison
33
LNG/CNG - $12/14
$/MMBtu
#2 Oil
21.35
#6 Oil
15.69
Prop.
9.46
Nat
Gas
3.64
Pellets - $10/12
Bio-mass - $6/8
Natural Gas Markets
34
Natural Gas Market
NYMEX Natural Gas Forwards vs. 1 Year Range
NYMEX Henry Hub Futures: 12 Month Forward Strip
5.5
5.5
5.0
5.0
4.5
$/MMBtu
4.0
3.5
3.0
4.0
3.5
3.0
2.5
2.5
Max
Min
Current
Jul-17
Apr-17
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
NYMEX PRICING
last close previous week 24-month high 24-month low
12 mo. strip, $/MMBTu $3.89
$3.75
$5.06
$2.56
date
3/8/13
3/1/13
6/8/11
4/19/12
change from last close
3.7%
22%
69%
Jul-13
2.0
2.0
Apr-13
$/MMBtu
4.5
Forwards Contract Date
FORWARDS
strip ($/MMBTu)
12 month
$3.89
18 month
$3.95
24 month
$4.05
36 month
$4.15
Natural Gas Markets:
Prompt Month
35
Natural Gas Futures
36
Natural Gas Storage
37
Natural Gas Resource
38
500 TCF of
natural gas is
technically
recoverable
from the
Marcellus
Shale
Natural Gas Resource
39




Total available
future supply =
2,074 tcf (2009)
Of this, 616 tcf is
from new shale gas
US consumption is
23 tcf per year
(2009)
Approaching 100
years supply at
current consumption
rates…
New Pipelines to Deliver Marcellus Shale Gas
40
Gas pipeline infrastructure into
New England
41


Existing interstate pipeline
infrastructure developed based
on gas flows predominantly
from

US Gulf Coast

Western Canada Sedimentary
Basin

Eastern Canada off shore
New Shale Developments in
Northeast impacting gas flows
and basis

Marcellus

Utica

Horton Bluff
Natural Gas – Supply in Maritimes
Sable Offshore Energy
Quebec
Quebec
City
Fredericton
Maine
VT
Deep Panuke
Moncton
Point Tupper
Bangor
PNGTS
Westbrook
Prince
Edward
Island
New
Brunswick
Goldboro
Saint John
Portland
Nova
Scotia
Corridor Resources
Halifax
NH
Boston
MA
CanaportTM LNG
Algonquin
Slide: Courtesy of Spectra Energy
42
42
Natural Gas Improvements :Maritimes
Sable Production down!
Quebec
New
Brunswick
Quebec
City
Fredericton
Maine
VT
Bangor
PNGTS
Westbrook
Saint John
Portland
NH
Boston
MA
Algonquin
Prince
Deep Panuke
Edward
delayed,
delayed
Island
–
now 2nd quarter next
Moncton
year - 2013! Point Tupper
Corridor ProductionGoldboro
down
from 100,000
dth per day
Halifax
Nova
Scotia
to sporadic 5,000 to
10,000 dth per day
Canaport FOR SALE –
Prices significantly below
the rest of the world
Slide: Courtesy of Spectra Energy
43
Sable Offshore Energy
Deep Panuke
Corridor Resources
CanaportTM LNG
43
Canaport LNG St John New Brunswick
• 1.2 Bcf/d max sendout
• 0.2 Bcf avg sendout
• 10 Bcf storage
Canaport LNG - August 2010


LNG is Natural Gas Chilled to -256F
 Pressurized to liquid state
Takes 600 times less space than gas; cheaper
and easier to transport
• 5.7 Bcf max ship size
• 66 Bcf delivered to mkt
• 32 cargos received
• Trinidad
• Qatar
• Egypt
• Peru
Photo From http://www.canaportlng.com/
44
44
Canaport LNG St John New Brunswick
Canaport LNG - August 2010
Canaport Daily Output
1-Dec
2-Dec
3-Dec
4-Dec
5-Dec
6-Dec
7-Dec
8-Dec
9-Dec
10-Dec
11-Dec
12-Dec
13-Dec
14-Dec
15-Dec
16-Dec
17-Dec
18-Dec
19-Dec
20-Dec
21-Dec
22-Dec
23-Dec
24-Dec
25-Dec
26-Dec
27-Dec
28-Dec
29-Dec
30-Dec
31-Dec
month avg
128,059
106,047
105,579
110,042
237,084
203,341
141,501
217,318
202,470
199,945
469,680
434,918
358,688
399,576
326,250
338,975
321,325
174,659
191,859
210,893
298,334
349,157
353,897
392,635
337,088
257,070
266,813
254,107
312,395
333,990
288,227
268,449
1-Jan
2-Jan
3-Jan
4-Jan
5-Jan
6-Jan
7-Jan
8-Jan
9-Jan
10-Jan
11-Jan
12-Jan
13-Jan
14-Jan
15-Jan
16-Jan
17-Jan
18-Jan
19-Jan
20-Jan
21-Jan
22-Jan
23-Jan
24-Jan
25-Jan
26-Jan
27-Jan
28-Jan
29-Jan
30-Jan
31-Jan
396,462
548,546
507,555
326,366
328,032
321,217
440,635
503,908
343,330
408,426
146,575
114,174
104,761
137,052
123,553
212,271
306,871
455,675
330,991
469,753
704,597
870,199
879,648
842,642
762,529
721,708
584,526
495,274
236,824
106,680
248,618
418,690
1-Feb
2-Feb
3-Feb
4-Feb
5-Feb
6-Feb
7-Feb
8-Feb
9-Feb
10-Feb
11-Feb
12-Feb
13-Feb
14-Feb
15-Feb
16-Feb
17-Feb
18-Feb
19-Feb
20-Feb
21-Feb
22-Feb
23-Feb
24-Feb
25-Feb
26-Feb
27-Feb
28-Feb
299,473
136,406
113,145
294,218
373,158
537,206
521,164
434,509
260,442
127,550
170,205
125,500
180,918
147,319
175,784
189,598
346,362
319,052
314,684
325,609
313,786
140,521
157,864
193,262
219,301
139,412
169,592
93,422
243,552
1-Mar
2-Mar
3-Mar
4-Mar
5-Mar
6-Mar
7-Mar
8-Mar
9-Mar
10-Mar
11-Mar
12-Mar
13-Mar
14-Mar
15-Mar
16-Mar
17-Mar
18-Mar
19-Mar
20-Mar
21-Mar
22-Mar
23-Mar
24-Mar
25-Mar
26-Mar
27-Mar
28-Mar
29-Mar
30-Mar
31-Mar
135,100
111,598
176,815
214,453
102,128
148,386
170,126
171,073
110,261
108,274
113,937
107,196
112,693
137,080
Throughout
Max
45
45
LNG Landed Pricing
46
Natural Gas Spot Prices
47
EAST Day Ahead Indices
Hub
Algonquin Citygates
Wtd Avg
Index
Change($)
Change(%)
High
Low
Vol(MMB
TU)
No. of
No. of
Weekly
Companie
Trades
Avg
s
Monthly
Avg
Begin
End
28.2523
3.62
14.72%
29.5000
27.0000
49,600
18
15
26.4401
23.6995
02/13/13
02/13/13
3.3844
3.3900
3.3513
0.04
-0.35
0.09
1.21%
-9.43%
2.83%
3.4000
3.3900
3.3750
3.3750
3.3900
3.3050
34,900
10,000
819,800
4
1
131
4
2
44
3.3641
3.3900
3.3052
3.4315
3.3900
3.3557
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
3.3524
0.11
3.31%
3.3600
3.3200
196,800
31
14
3.2987
3.3479
02/13/13
02/13/13
3.3466
28.0000
5.3796
5.5714
5.7085
3.3148
3.3744
3.3613
3.5000
0.12
2.00
0.27
-0.19
0.04
0.11
0.09
0.05
0.10
3.60%
7.69%
5.22%
-3.26%
0.79%
3.53%
2.60%
1.57%
2.80%
3.3650
28.0000
5.7000
5.6000
6.1000
3.3500
3.4000
3.3700
3.5000
3.3200
28.0000
5.0500
5.5000
5.4000
3.2950
3.3550
3.3600
3.5000
549,400
5,000
162,600
7,000
99,600
219,700
99,000
7,500
20,100
103
2
42
2
27
34
23
3
3
38
3
23
4
19
20
14
4
3
3.2885
27.0000
5.2461
5.6653
5.6862
3.2583
3.3317
3.3354
3.4524
3.3462
24.3081
8.6145
10.6976
10.6296
3.3045
3.4183
3.4142
3.4833
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
3.3580
0.07
1.99%
3.3800
3.3350
208,200
24
18
3.3252
3.3713
02/13/13
02/13/13
3.5770
3.2709
3.3889
23.2738
0.02
0.08
0.06
1.16
0.45%
2.53%
1.65%
5.24%
3.6700
3.2900
3.4050
28.0000
3.5300
3.2200
3.3600
19.0000
374,400
79,700
54,100
74,600
73
19
14
26
32
17
14
18
3.5691
3.2306
3.3614
22.6943
3.9135
3.2527
3.4128
22.0254
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
02/13/13
3.5244
0.08
2.25%
3.5600
3.4900
158,000
29
19
3.4857
3.7040
02/13/13
02/13/13
Transco-Z6 (non-NY)
3.5425
0.07
2.01%
3.6000
3.5100
149,600
37
21
3.5077
3.9187
02/13/13
02/13/13
Transco-Z6 (NY)
6.3790
0.92
16.90%
6.5500
6.1000
160,600
36
26
5.9180
11.1639
02/13/13
02/13/13
Clarington
Clarington-Tenn
Col Gas TCO
Col Gas TCO-Seg
Pool
Dominion-South
Dracut
Iroquois (into)
Iroquois-Z1
Iroquois-Z2
Leidy-Transco
Millennium EP
REX E-MidW
TETCO-M2
TETCO-M2 (receipt)
TETCO-M3
TGP-Z4 Marcellus
TGP-Z4 Sta-219
TGP-Z6 200L
Transco-Z5 (nonWGL)
CNG/LNG
48
•
•
•
•
Development in Northern Maine, NH
Costs - $12 to $14 per mmbtu
LNG – on site storage
CNG – compressed containers
Natural Gas Conclusions
49



US natural gas resource is large and growing
New shale gas discoveries and drilling techniques should
keep prices low in the near and mid term
Risks include:




Increased regulation to mitigate environmental issues surrounding
new fracking techniques
Greatly increased domestic demand for power generation,
transportation
Exports
Northeast is different
Natural Gas Conclusions
Northeast/North Altantic
50

Sable’s performance is inconsistent – down




Deep Panuke will be operational no later than July 1st, 2013 (revised)
New Shale discoveries in New Brunswick – cannot happen fast enough
Canaport – Repsol was not sold



Coming in 2016 – New pipes - AIM and others from the south
Hedged gas prices BASIS – now at a premium


Other Repsol assets sold
Managing output – maximizing return
Limited Supply in NS; lack of infrastructure to help


Field issues – pipe erosion/corrosion (2nd quarter)
Relief in the Spring/Shoulder?
Un-hedged positions – pricing will be dictated by weather – hit $20 to $50
per mmbtu/day
Energy Segment
51
Power
US Power Mix
52
New England Energy by Fuel Type
53
 Significant
Increase in
Natural Gas
 Nuclear has
held constant
Price of Natural Gas
Affects the price of electricity
54
As Natural Gas
goes so does
power
Price of Natural Gas
Affects the price of electricity
55
New England On Peak Energy Price Forecast 2011-2030












Heat Rate Increases
Base load retirements
Fuel mix (more oil/ LNG)
Gas Prices (Henry Hub or Basis)
Restricted supply development
Factor cost increases (Rig
competition)
Environmental Externalities (e.g.,
CO2)
New capacity development
Renewables
Distributed Generation
Gas Prices (Henry Hub or Basis)
Quebec/Eastern Canadian gas
Electricity – Spot Prices
56
Power Conclusions
57




Low natural gas prices and large Canadian hydro
resources are likely to keep power prices relatively
low in the near to mid term (connectivity still prevails)
Most proposed new capacity in NE is Wind (36%)
and nat gas (42%)
Transmission Costs (to be discussed later) are going up
Gas dependency issue with spot prices
Energy Segment
58
PROPANE
Propane
59
Propane Conclusions
60

Viable Alternative to Oil

Supply Disruption Risk In North East

Tank Ownership

Less Transparency – no longer trades on NYMEX
Energy Segment
61
Biomass
Biomass
62

Pellets



Not price competitive with pipeline natural gas
On par with propane
Very price competitive with #2 and resid oil







16 MMBtu per ton
$150 to $225 per ton + $15 to $25 for delivery
$10 to $16 per MMBtu ($1.40 to $2.30 per gal #2 oil equivalent)
Be careful of packaged proposals including both supply and
equipment
Be aware of additional loads (electric) not priced into system
Maintain fuel flexibility if possible
5 year fixed price contracts are possible
Biomass
63
 Wood Chips
 More expensive capital costs than pellets (2-3 X)
 Less expensive fuel
 7 to 8 MMBtu per ton
 $30 to $75 per ton
 $6 to $11 per MMBtu ($0.85 to $1.55 per gal #2
oil equivalent)
 Handling

Both Pellets & Chips
 Transportation, Storage, Disposal
64
Procurement
Procurement Strategies – What to do?
65





Understand your risk tolerance
 Risk vs reward
Make a market assessment
 High prices
 How high?
 Relief
Finance – internal discussion
 Budget Assurance
Product Discussion
 Electricity – fixed, heat rate, block and index, index, etc
 Nat Gas – fixed, dailies, combinations
 General – hedge vs spot
Terms
 Long
 Mid
 Short
Procurement – Costs Management
66









Yearly Strategy Developed
Agreed triggers and actions
Costs outlined
Green Initiatives
Market Understanding
Market Monitoring
Political Management
Fiscal Management
Risk Management
Electricity Procurement Strategy
67
 Product
Options Evaluation
 Real
Time Spot Pricing
 Heat Rate Index
 Block and Index
 Hybrid
 Bandwidth Limited
 Fixed Price, Fixed Term
(Full Requirements
Service)
Decreasing Levels of Risk
Electricity Procurement Strategy
Bid Analysis (1)
68



Detailed 4 page
Bid Analysis
All Pre-approved
suppliers
participating
Page 1 Summary
of bids and
products

Pass throughs

All inclusive

Index
Electricity Procurement Strategy
Bid Analysis (2)
69



Page 2
Effective Rank
Ordering
Across
Products
Estimated
Budget Totals
for Lowest Bid
Spot MarketReal-time and Day-ahead Pricing
70

Issues with real-time and day-ahead

Costs that are passed through and not shown:



Standard costs - $7 to $12 per MWh




Ancillaries
Line losses
Renewables
Margin or fees


FCM - $5 to $15 per MWh
RMR - $0 to $7 per MWh
Regulatory Costs
Market volatility risks

Costs - spikes


Weather
 Hurricanes
 Extreme temperatures
Other
Oil & Transparency-Spot
71
Product
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#6
#4
#6
#6
#6
#6
#6
#6
#6
#6
Ethanol
#2
#2
#2
Delivery Point
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Harbor
New York Castle
New York Hess
New York Avg
New York Hess
Portland Global
Portland Global
Boston Global/Atl.
Boston Avg
Boston Global/Atl.
Boston Avg
Boston Global/Atl.
Boston Avg
Boston Global/Atl.
Boston Global/Atl.
New York Harbor
New York Harbor
New York Harbor
Boston
Type Sulfur Poor
Cargo
0.3 Low
Cargo
0.3 High
Cargo
0.5 Low
Cargo
0.7 Low
Cargo
1.0 Low
Cargo
2.0
Cargo
2.2
Cargo
2.8
Barge
0.3 Low
Barge
0.3 High
Barge
1.0
Barge
2.0
Barge
2.2
Rack
0.3
Rack
0.3
Rack
0.3
Rack
1.0
Rack
2.0
Rack
1.5
Rack
0.5
Rack
0.5
Rack
1.0
Rack
1.0
Rack
1.5
Rack
1.5
Rack
2.0
Rack
2.2
Truck
Barge
0.2
Barge
Barge
Code
Px Last Last Update Dt Last Update Px Close 1d Px Close 1m Px Close 1qtr Px Close 1yr
N6NY.3LC Index
114.63 5/10/2012
3:59:00 PM
115.38
129.13
133.63
113.13
N6NY.3HC Index
114.13 5/10/2012
3:59:00 PM
114.88
128.38
129.63
111.13
N6NY.5LC Index
110.13 5/10/2012
3:59:00 PM
111.13
123.38
121.88
105.88
N6NY.7LC Index
109.63 5/10/2012
3:59:00 PM
110.88
123.13
121.63
105.63
N6NY1LC Index
105.38 5/10/2012
3:59:00 PM
106.88
119.88
118.63
101.13
N6NY2.0C Index
103.88 5/10/2012
3:59:00 PM
104.63
110.13
113.13
97.13
N6NY2.2C Index
103.38 5/10/2012
3:59:00 PM
104.13
109.63
112.63
96.88
N6NY2.8C Index
102.63 5/10/2012
3:59:00 PM
103.13
108.13
112.13
96.63
N6NY.3LB Index
114.88 5/10/2012
3:59:00 PM
115.63
129.38
133.88
113.13
N6NY.3HB Index
114.38 5/10/2012
3:59:00 PM
115.13
128.63
129.88
111.13
N6NY1LB Index
105.63 5/10/2012
3:59:00 PM
107.13
120.13
118.88
101.38
N6NY2.0B Index
104.13 5/10/2012
3:59:00 PM
104.88
110.38
113.38
97.38
N6NY2.2B Index
103.63 5/10/2012
3:59:00 PM
104.38
109.88
112.88
97.13
NYN6CASA Index 135.45 5/10/2012
9:32:00 AM
136.2
156.1
158.25
139
NYN6HESA Index
137.7 5/10/2012
9:32:00 AM
139.7
158.8
160.3
138.85
NYN6AV.3 Index
136.58 5/10/2012
9:32:00 AM
137.95
157.45
159.28
138.93
NYN6HESC Index
120.15 3/5/2012
3/5/2012
120.15
120.15
120.15
120.15
POR6GLO6 Index
122.5 5/10/2012
9:32:00 AM
124.7
140.4
135.9
118.6
POR6GLO4 Index
142.3 5/10/2012
9:32:00 AM
143.2
152.7
150.8
137.9
BON6GLOB Index
141.2 5/10/2012
9:32:00 AM
142.9
156.5
153.8
136.8
BSN6AV.5 Index
120.15 2/29/2012
2/29/2012
120.15
120.15
120.15
111.58
BON6GLOC Index
133.5 5/10/2012
9:32:00 AM
135.7
148.4
143.9
126.6
BSN6AV1 Index
120.15 2/29/2012
2/29/2012
120.15
120.15
120.15
103.33
BON6GLOE Index 123.25 5/10/2012
9:32:00 AM
125.45
141.15
136.65
119.35
BSN6AV15 Index
120.15 2/29/2012
2/29/2012
120.15
120.15
120.15
99.25
BON6GLOD Index
122.5 5/10/2012
9:32:00 AM
124.7
140.4
135.9
118.6
BON6GLOI Index
118.75 5/10/2012
9:32:00 AM
120.95
136.65
132.15
114.85
ETHNNYPR Index
218 5/10/2012
11:54:00 AM
223
230
226.5
267.5
NO2INYPR Index
297.59 5/10/2012
3:18:00 PM
299.16
308.32
315.79
299.12
NO2INYAM Index 297.84 5/10/2012
3:18:00 PM
299.41
308.57
315.84
299
NO2IBSTN Index
300.22 5/10/2012
3:18:00 PM
301.79
311.07
318.29
301.75
Transparency – at NY Harbor
What is the future?
Focus on
transparency and
liquidity points
that can be
tracked
Oil Transparency- Futures
72
Add NYMEX
Adder to
settlement
price –
Complete
Transparency
Bloomberg Screen From 5/10/12
Procurement Strategies
73
 Natural Gas




Basis
 Price above an indexed price, typically NYMEX
 Load following, balancing, capacity, margin
Fixed Price
 Set or allotted amount of gas
 Swing – up or down based on variance and either daily or monthly settlements
 Full load or percentage of load
Variable
 Market based – monthly settlement, typically NYMEX
Daily
 Ride the market
 Daily settlement at a liquidity or reference point
Procurement Summary
74

For Any Energy Product









Market monitor
Don’t panic – energy markets are volatile
Maximize competition with robust competitive bid
Compare apples to apples
Contract Terms & Conditions are important
Regulatory changes are important
Maximize transparency of all pass throughs
Explore different term lengths and contract types
Repeat often!
75
Regulatory Issues
New England and Electricity at a
Crossroads
76
Ongoing issues in NEPOOL
77

Three ongoing issues in NEPOOL that are having an
impact on the electricity prices you pay:
 Forward Capacity Markets (FCM)
 Transmission Upgrades
 Regional Greenhouse Gas Initiative (RGGI)
Forward Capacity Market
78
FCM (Formerly LICAP)
 Incentives for generators to build new capacity in congested areas (MA/CT)
 Also incentivizes end users to shed load during peak
 FCM Charges (Not including reserve margin)
$4.50 kW/month – 6/01/10 – 5/31/11
$3.60 kW/month – 6/01/11 – 5/31/12
$2.95 kW/month – 6/01/12 – 5/31/13
$2.95 kW/month – 6/01/13 – 5/31/14
$3.21 kW/month – 6/01/14 – 5/31/15
$3.43 kW/month – 6/01/15 – 5/31/16
Charges for customers range from $0.005 to $0.015 per kWh
System Peak or OP4 Events
Set August 2nd – 1:33pm hour EST – 2006 (1400); Set August 3rd – 2:43pm
hour EST – 2007 (1500); Set June 10th – 4:00pm hour EST – 2008 (1600); 2009
– 2pm – August 18th; 2010 – set on July 6th @ 3pm; 2011 – set on July 22nd @
3pm
Load Response Program
79



Revenue program – compensation
reduce load



for agreeing to
Winter & Summer Audits and/or Actual Events
Revenue based
FCM tag is reconstituted
CES Self Help Program


During ISO event shed load to reduce capacity
tag
Cost Containment
Issues to consider



Grid parallel
Air Emissions
Liability
Transmission Upgrades
80



Transmission charges are
embedded in rates charged for
“Delivery Service” – Open
Access Transmission Tariff or
OATT
OATT charges are the same
regardless of where you obtain
your electricity.
OATT charges have been
relatively small to-date – less
than $10/MWh for all
customers
CMP’s
MPRP
Chart by ISO – New England
Transmission Upgrades … 2
81



There are significant transmission
upgrades and expansions that
ISO-NE has approved – up to
$10.0 billion.
Most of these are designed to
improve reliability in CT, VT and
MA and to move less expensive
power to customers in these
regions.
Cost of upgrades is “socialized”
across all load in NEPOOL – OATT
rates are projected to increase by
80% over the next few years.
Chart by ISO – New England