What should the cost of electricity be?
What should the cost of electricity be?
Electric utilities are paid based on maintaining their distribution network (wire, poles, transformers, etc.) within their service area and receiving payments based on the cost of providing that service plus a profit. The electric utility business is a monopoly in that there is no competition to their service; therefore, their costs get scrutinized to determine if they were spent appropriately. Those costs that are deemed appropriately spent on necessary service are repaid plus a profit.
However, the price of electricity is no longer a monopoly. Electric pricing in Illinois is based on market conditions of supply and demand.
Most electric power in Illinois is purchased by customers (not utilities) and those purchases are direct between the customer and the energy supplier (marketer). That actual electricity comes from power plants. All the electricity purchased by customers flows through the utilities distribution network (COMED, Ameren or MidAmerican).
Large electric generators, like nuclear power plants, receive preference in operating due to the fact that they are most efficient when operating at full power. Smaller generators including coal and solar plants bid a price in the hopes of selling energy at that price.
Exelon, the owner of several nuclear power plants, is threatening to shut down 1 or more plants in Illinois UNLESS they get paid more.
Exelon is the parent company that owns many electric power plants and four large utilities (including ComEd and BGE).
Exelon’s threat seems to be a case of having your cake and eating it. They own utilities so they earn profit for spending money to provide service and they own power plants that must compete to earn money. They know the difference and should not try to alter market pricing to get preferred pricing.
Illinois should not reward Exelon’s bullying with more profit. The market can make up for the loss of electricity from shutting down inefficient power plants.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Supporting Articles:
Chicago Weekly Basis Report
What are basis? it’s the price difference between the price of an energy in one market and the price of an energy commodity in a completely different market.
Locational basis is the “different” market can be at a different location
Calendar basis risk, or calendar spread risk, is the risk that arises from hedging with a contract that doesn’t expire on the same date as the underlying exposure.
As an example, a large consumer of gasoline might decide to hedge their exposure to gasoline price by purchasing NYMEX RBOB gasoline futures. In this example, the consumer is exposed to calendar basis risk as NYMEX gasoline futures expire on the last day of the month prior to the delivery month i.e. the October 2013 RBOB gasoline futures contract expired on September 30, 2013. While many might assume that this consumer has no choice but accept the basis risk. There are other instruments which will allow them to mitigate their exposure to calendar basis risk.
What country produces over 100% of its electricity by wind power alone?
Denmark Just Produced 140% Of Its Electricity Needs Via Wind Power
…and exported the excess supply to Germany, Sweden and Norway. Imagine: 100% sustainable energy.
The majority of Denmark’s wind farms are located off-shore (nearly invisible from land). The US just approved its first off-shore windfarm…..perhaps 1 day we could be like Denmark!
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Realgy owns and operates 4 solar plants located in Illinois producing nearly all the energy Realgy consumes in a year.
Supporting Documentation:
Read More: http://www.trueactivist.com/denmark-just-produced-140-of-its-electricity-needs-via-wind-power/?utm_source=fb&utm_medium=fb&utm_campaign=tmu
Where are the differences between an electric utility, Government regulators and energy companies in delivering renewable energy?
Look at the differences that emerge when an energy company wants to deliver wind energy generated in one state across three states.
The players:
- Utilities: these are regulated monopolies that generate and delivery energy to customers within their franchised area
- Government Regulators: oversee Utilities within their state
- Energy companies: offer alternative energy service to customers wherever customer choice is allowed
Today, there is no National Energy Policy which encourages the distribution of renewable energy. Utilities are required to look only within their state. Government Regulators oversee Utilities only within their state. Energy Companies which are not bound by state boundaries look to address the national need for clean, renewable energy.
A power line in Missouri was denied by the Missouri Regulators because it did not show enough benefits for state residents. However, it should great benefit to the Country.
While the Federal Government promotes the installation of renewable energy, this example highlights the need for a National Energy Policy to support competitive energy supply at the wholesale transmission level.
By way of background, Utilities have separated their business into 2 different parts; energy supply and distribution (delivery of the power through the wires). A utilities’ business remains the same; provide electric service within their franchised area or jurisdiction. However, most states have introduced competition for energy supply. Competition allows Energy companies to serve business or residential customers directly by offering a wholesale electricity price that the Utility cannot markup or add additional costs.
Electricity is generated and traded at a wholesale level on a regional basis. Utility Regulators oversee the utilities within their State. Energy Companies usually acquire wholesale power at the regional level and have it delivered to the local Utility. The Utility still delivers the electricity regardless of who you bought it from.
Government Regulators oversee Utilities because they still have a monopoly to serve customers. The Regulators job is to oversee the Utilities within their State and review the costs and expenses of the Utility. A Utility recovers costs incurred in providing service to customers (delivery and energy supply) which are approved by Regulators.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Supporting Documentation:
Weekly Basis Report Currently Focusing on Chicago
We have two days of data due to the fact that we are in a new month and currently don’t have 10 days of data to present for July.
U.S. Natural Gas Supply is Expected to Reach 110 Billion Cubic Feet Per Day by 2035, According to Navigant’s Global Energy Practice
The opening of new export facilities in the United States marks a new era for the global natural gas market, report concludes
CHICAGO–(BUSINESS WIRE)–A new report from Navigant’s global Energy Practice, the North American Natural Gas Market Outlook, Year-End 2014, examines the state of the natural gas industry and provides forecasts for supply and demand through 2035 Driven by ongoing gas shale growth in the Northeast, production of natural gas in the United States continued its strong growth trajectory in 2014, increasing by 6.1 billion cubic feet per day (Bcfd), or 9.2 percent, over the course of the year. More growth in gas production is expected in the future, particularly from the Marcellus shale formation, with the only possible constraint the rate of infrastructure development in the region. According to the North American Natural Gas Market Outlook, Year-End 2014, published by Navigant’s Energy Practice, U.S. natural gas supply is expected to increase from 72 Bcfd in 2015 to nearly 110 Bcfd by 2035.
“Supply side growth continues to drive most other aspects of the natural gas industry in North America,” says Gordon Pickering, Director with Navigant’s Energy Practice. “As we explain in the Natural Gas Market Outlook, this strong supply basis is giving rise to a new chapter of the gas industry, with the culmination of a half decade of new LNG project development and the beginning of a new, global market for natural gas.”
The opening of this new market is signaled by the opening of new export capacity on the U.S. Gulf Coast, according to the Natural GasMarket Outlook. The opening of Sabine Pass will signify the point at which North America becomes connected to the global gas market for the first time in history—with truly global consequences for gas markets in North America and around the world. Those consequences will become fully apparent as more LNG export projects come online, the report concludes.
Solar Energy is Gaining in Scale
Solar Energy scale of deployment is accelerating.
Solar energy’s share of the total electricity supply has been gaining for years. Now, it becoming so mainstream that entire companies and even States are not only committing to buying solar energy but to building it.
Amazon is building the largest solar farm in Virginia. It is part of their commitment to run their company using 100% renewable energy.
Hawaii will be the first state that will run entirely on renewable energy.
A trend, certainly.
The cost is at or below fossil fuel costs. Taking into account environmental and health benefits of solar energy, the commitments are becoming easier to make and implement.
Supporting documentation:
Indiana’s Electric Rate Hurts Competitiveness
One measure of competitiveness is the price of electricity in a State.
Indiana has gone from 5th lowest in the Nation in 2003 to 26th in 2014 (electric rates went up)!
Surrounding States have all improved (lowered their electric costs).
A major difference: all surround States have implemented electric choice.
Electric Choice allows customers to purchase their energy from a wholesale supplier without any utility markup. The idea: give customers a choice and direct access to the energy markets and have competition do what competition does; lower costs and improve services.
In Illinois, not exactly the most business friendly state for taxes, electric savings have exceeded $37 BILLION. http://realgyenergyservices.com/competition-work-tune-37-billion/
In NIPSCO and Citizens Energy, where they have customer choice programs for natural gas customers, Realgy’s average customer is saving money monthly:
- Citizens Energy: over last 36 months savings of $6,643: http://realgyenergyservices.com/service-plans-52/
- NIPSCO: over last 36 months savings of $6,581: http://realgyenergyservices.com/service-plans-47/
In Indiana: some of the biggest utilities do not offer customer choice for natural gas service; this includes Vectren, Duke and AEP. No utility in Indiana is offering customer choice for their electric service.
Competition in energy markets has been demonstrated to lower costs. Surrounding States’ to Indiana have lower electric costs in-part because of implementing electric choice. Natural gas costs are more competitive in NIPSCO and Citizens due to customer choice.
Realgy supports customer choice for energy, our experience has demonstrated that it saves consumers time and money in energy use and decisions.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Supporting Article: http://www.nwitimes.com/business/industry-indiana-electric-rates-hurt-competitiveness/article_a10b7072-4e2f-51a7-8ed0-0b99c4e4ce01.html
Realgy joins GE, Travelers and Aetna in opposing Connecticut’s unitary tax
Realgy operates as an energy services company which sells natural gas, electricity and related services in the States’ of Illinois, Indiana and Michigan.
Most of our employees are located in Connecticut, in which we earn NO revenue.
Below is a table that shows a simplified representation of where we earn revenue and where we pay tax in the state where we earn it.
Connecticut taxes are based on a ratio of revenue (in states where we do not pay state tax), payroll and property taxes. The other states are purely revenue based tax.
So as depicted above we do not pay Connecticut any state sales taxes when we earn and pay taxes for that revenue in other states.
However, we are currently before the state of Connecticut tax commission which wants to recognize the income in other states as being earned and taxable in Connecticut.
This would results in Realgy PAYING TAX in the state where we earn and currently pay tax and IN CONNECTICUT where we do not earn any revenue.
Realgy does pay tax in Connecticut for our employees and for revenue earned in states where we do not pay taxes.
If Connecticut tax commission is successful in their audit it will result in a charge to Realgy of some $20,000 in additional taxes owed (for this year and each year hereafter). Again, we have already paid taxes on this income in other states.
The issue of unitary tax being commented on by the large companies is exactly what we are facing before the CT tax commission. The CT legislature is going after the big companies that have split up the companies legally to avoid the double taxation by CT.
If CT is going to tax ALL of a company’s revenue, in addition to paying local property and payroll taxes, keeping multinationals or small companies (like Realgy) that work in other states headquartered in CT will be a very difficult proposition.
Cost Regulations
2015 ENERGY REGULATIONS LEAD TO HIGHER EQUIPMENT COSTS, BUT WILL THEY HELP YOU SAVE ON ELECTRICITY AND NATURAL GAS?
The Department of Energy has implemented new efficiency regulations on electric and natural gas water heaters as well as air conditioning equipment for 2015. The standards will make new equipment slightly more energy efficient, however, the savings will, for the most part, be insignificant. The increased cost of new equipment will be pricey for homeowners upfront. The resulting savings per household for reduced electricity and natural do pay for the upgrade.
The air conditioning equipment regulations went into effect on January 1, 2015. They apply to split air conditioners and heat pumps as well as traditional central AC compressors. The regulations call for new equipment to increase the Seasonal Energy Efficiency Ratio (SEER) from 13 to 14. The one point SEER increase is fairly negligible from a cost savings standpoint, but the reduction in energy usage across millions of household will add up. The one point translates to roughly 7% electricity savings per year for the average household. Based on national electricity usage and cost averages this would equate to savings of approximately $18 per year.
The most significant referenced downside associated with the new HVAC regulation revolves around the higher cost of the equipment and installation. New equipment will be larger and will likely require most all parts of the AC system to be replaced, not just the compressor. Also, because the equipment will be larger, some very small homes may require modifications to accommodate the larger equipment.
Regulations affecting water heaters run by electricity and natural gas took effect on April 16, 2015. The pros and cons parallel that of the AC standards. The new efficiency guidelines have resulted in more costly equipment. By some estimates new water heaters will cost roughly $120 more. In addition the new equipment means a more complex, time-consuming installation with more expensive parts. Electricity and natural gas savings will vary widely based on the size of your tank.
The changes the US Government is taking are part of a larger trend by all governments worldwide towards implementing more energy efficient regulation. Initial upfront cost is certainly a factor taken into account by such regulations, but cited more frequently are the health and environmental benefits that will compound yearly as a result of reduced emissions and improved air quality.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual savings. Additional information: www.realgyenergyservices.com
Wind power…in all 50 states
Look outside: chances are you don’t see a wind turbine or a fifty story building. But, chances are, within 5 years, you will see a fifty story wind turbine!
Currently, the United States produces about 65 gigawatts across 38 states. However given the recent gains in technology, the Energy Department forecasts that wind power could contribute 16,150 gigawatts…this is 10x more power than we currently consume!
So will wind power drive our future. In will certainly be a growing contribution and here is why:
1. Climate change: the warmer the climate the more wind is produced
2. Larger Scale: as wind turbine design grows the economics for large scale development improve
3. Smaller Scale: new technology allows for efficient small deployment (think 1-2 homes)
Climate change is driving weather changes. These weather changes are becoming more pronounced. Weather forecasting is showing that current trends will continue resulting in wind speeds that provide for larger scale wind turbines.
Larger scale: Currently, the largest wind turbines are 260 feet. The higher the wind turbine reaches, the faster the wind blows so getting larger means you can install a wind turbine and compete with the economics of coal. Current designs are being planned for 460 feet; that’s nearly as tall as a fifty story building.
Smaller scale: a wind turbines without spinning blades! It looks like asparagus but rises between 25-100 feet depending on location. The trunk of the column spins (no blades) and the power is generated in the base. This type of wind turbine is safe for use in residential neighborhoods.
As we learn: With change comes opportunity and certainly power development and climate is changing.
Keep looking for the wind turbines, they are coming.
Realgy Energy Services provides power to Illinois customers that is produced from renewable resources such as solar, wind and hydro (water). It’s called ManagedGreenTM; it’s priced slightly below the utility cost of service and provides health and environmental benefits. Consider that the average mid-west home uses about 10,859 kWh/year if that power comes from Realgy’s ManagedGreenTM service it would result in the following benefits:
1. Reduction in 29,295 lbs. of coal/year
a. 7,595 lbs. of CO2 NOT emitted
b. No sulfur, lead or waste emissions
c. 29 fewer trucks on the road
2. Equivalent of 584 trees planted
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Links to contributing articles:
http://www.iflscience.com/technology/new-bladeless-wind-turbine-looks-asparagus