With the kind of winter that we had and more and more coal firing plants being converted to gas, energy prices have nowhere to go but higher.

Yahoo ran the following story today:

ENERGY PRICES RISING IN BOTH THE SHORT AND LONG TERM:

POWER: Approximately 60% of middle market energy executives  believe electricity prices will rise over the next 18 months. Nearly  three out of four executives (72%) see
higher power prices through 2019. Full article in Yahoo Finance

This winter has provided a stark reminder to those who manage energy. It’s now clear that natural gas and electricity prices remain volatile.

The early start to winter and prolonged bitter cold have depleted natural gas storage inventories concerning traders and affecting the market as much as 5-10% in a single day.

This winter may be harsh, but your energy bills don’t have to be. Don’t get caught as one those companies who passed on good opportunities hoping for even lower rates.

To put this into perspective, let’s take a look at the recently expired February 2014 NYMEX natural gas futures contract.   In November 2013 the contract traded as low as $3.46/Dth. On its last day of trading, January 29, it had risen 65% to a high of $5.72/Dth and ultimately expired at $5.557/Dth.  That was the highest expiration price for a NYMEX natural gas contract in 50 months.

For the past two years, companies have been cautioned that a day of reckoning would be coming as the nation continues to retire coal fired generation and put increased demand on natural gas usage.   The increase in shale gas production from fracking has been a great mitigating factor in limiting the price run up this year.

End-users who purchased natural gas on a monthly variable basis have enjoyed low stable prices for a few years now, but in the past several months, natural gas bills doubled from last year and tripled from the lows set in 2012.

Moreover, the pain has not been confined to natural gas consumers.  With so much electricity coming from gas-fired power plants, electricity prices have soared as well.  Customers who could have locked-in fixed rates months ago near 5 cents/kWh are now reportedly paying variable rates of 10-20 cents/kWh depending on their region of the country.

All businesses and non-profit organizations in deregulated states can lock-in rates before thay go even higher. A qualified energy consultant can do all the work necessary to save money in the future and possibly cut your current energy prices.

The U.S. Energy Information Administration recently released this information regarding the closing of coal fired electricity generation. This will certainly have an adverse effect on commercial energy prices.

Planned coal-fired power plant retirements continue to increase

The need to comply with the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) regulations together with weak electricity demand growth and continued competition from generators fueled by natural gas have recently led several power producers to announce plans to retire coal-fired facilities.

Between 2012 and 2020, about 60 gigawatts of coal-fired capacity is projected to retire in the AEO2014 Reference case, which assumes implementation of the MATS standards, as well as other existing laws and regulations. The recently announced 5.4 gigawatts of retirements reflect particular strategies of coal plant operators and provide a view of some key drivers in coal plant retirement decisions.

Tennessee Valley Authority. On November 14, 2013, the Tennessee Valley Authority (TVA) announced that it was retiring eight coal-fired units with nearly 3,000 megawatts (MW) of generating capacity. Two units at TVA’s Paradise Fossil Plant (1,230 MW), Unit 8 at the Widows Creek Fossil Plant (465 MW), and all five units at its Colbert Fossil Plant (1,184 MW) are now slated for retirement. The current retirement plans are an addition to TVA’s previously reported retirement plans announced in 2011. TVA officials gave no fixed dates for the planned retirements, but they stated that the units will not operate beyond the MATS implementation date (April 2015).

South Carolina Electric & Gas. South Carolina Electric & Gas (SCEG) announced that it had ceased operations at its Canadys Station generating facility earlier in November. The 295-MW plant’s closing is part of SCEG’s efforts to reduce emissions and to comply with MATS regulations that are scheduled to take effect in 2015. SCEG originally planned to convert the units to natural gas before retiring them in 2018.

Consumers Energy. Consumers Energy (CE) petitioned the Michigan Public Service Commission (MPSC) to approve a bond issue to cover costs pertaining to the closure, decommissioning, and demolition of three coal-fired power plants. The facilities, Units 4 and 5 of the B.C. Cobb Plant (312 MW), Units 7 and 8 of the J.C. Weadock Plant (310 MW), and Units 1, 2, and 3 of the J.R. Whiting Plant (325 MW), would cease operations by April 2016. CE stated that the units would be shut down because the installation of additional emissions controls necessary to achieve compliance with EPA environmental regulations would be uneconomical. It was announced on December 3, 2013, that MPSC had approved the bond issue.

Energy Capital Partners. New Jersey-based Energy Capital Partners (ECP) filed paperwork with the Independent System Operator of New England (ISONE) to close the Brayton Point generating facility in 2017 after it failed to reach a deal on a new power-purchase agreement. Brayton Point currently has agreements with ISONE through May 30, 2016. ISONE voted to reject the retirement of the coal-fired units on December 19, 2013, after which the company stated it would go forward with plans to retire all units. Three of the four Brayton Point generating units, totaling about 1,084 MW, are coal-fired; the remaining 435 MW of generator capacity are powered by oil or natural gas. ECP had just recently finalized the purchase of the 1,520-MW facility from Dominion Resources in September 2013.

Georgia Power. Georgia Power (GP) announced that it planned to file a request with the Georgia Public Service Commission (GPSC) to decertify Unit 3 at its Mitchell generating facility. If approved by the GPSC, GP plans to retire the 155-MW unit before the end of April 2015. GP had proposed to convert the unit to use biomass, but the conversion was determined not to be cost effective.

What does this have to do with electricity and gas prices? The less coal there is to go around, the more gas is used for electricity generation. With gas demand increasing on it’s own (especially with the winter which we just experienced), both gas and electricity prices will certainly head higher. The easiest method to protect your business from commercial energy prices that could be headed into the stratosphere, is to lock in rates today. Flat rate contracts as long as five years are available from multiple energy providers in every deregulated state. Get started saving on energy prices today.