Natural Gas at Five Year High
Natural Gas prices have made a jump above $6.00 Dth or $0.60 / therm in the wholesale market; this is a 30% increase in the last couple days!
This increase looks speculative by traders but if it holds till February 26th it will set a five year high for the NYMEX first-of-month pricing and will keep bills high
The Bloomberg News article “Natural Gas Gains With Coffee as Commodities Jump; S&P 500 Rises” discusses the impact of natural gas and other commodities from the traders perspective.
Natural Gas price increased 27% on February 18, 2014
To keep track of the wholesale prices please enroll with Realgy’s NYMEX reports. It will send you NYMEX end-of-day reports daily.
Realgy is working to ensure our pricing stays as low as possible. Given we are all dealing with the coldest winter in 20 years and the highest energy prices in over 5 years.
Why are natural gas bills so high?
Two factors are at play on your bill; the amount of energy used and its cost. The following example is based on natural gas but electricity would be similar.
| This Year | Last Year | |
| Usage in Therms | 113 | 72 |
| This winter is 13% colder than Normal. | ||
| Gas cost/Therm | $0.718 | $0.420 |
| Average gas prices have more than doubled | ||
| Billed | $81.13 | $30.24 |
| Your bill will be the higher than it has been in the last 5 years | ||
Last year was warmer than a Normal* winter; in fact it was 72% of Normal in December 2012 and January 2013.
So if in a Normal year you use 100 Therms of natural gas, last winter you used 72. This was when the price of natural gas was about $0.420/Therm.
Now consider this December 2013 and January 2014 winter that is 13% colder than Normal.
So you will use 113 Therms. This is when the price of natural gas is about $0.718/Therm.
*a Normal winter is an average of 20 winters
A POLAR VORTEX…now that’s an extreme Weather Event!
Due to the severe weather in the Chicago Area during January 2014, the price of power quadrupled. Fortunately there was no accompanying shortage and, while the cost of power increased, the grid and the generation met everyone’s demand.
The wholesale costs for January 2014 for deliveries into the Tri-State (Illinois, Indiana, and Michigan) area:
- Natural gas went from about $4.40 to nearly $18.00
- Electricity settled at over $0.75, where it is normally around $.035
Realgy will recover the costs related to this short-term power cost increase with a onetime Real-Time Settlement charge on electric bills. This charge covers only the additional costs Realgy incurred for the market power we had to purchase to cover the extreme costs associated during this period. It will appear on either your January or February bills. By contrast, the utility will eventually raise rates (usually limited to two times a year) to cover their costs during this event.
Natural gas bills will look the same but you will notice the bill is higher. While Realgy’s base rate remains low the cost related to each utilities supply management practices imposed by Utility will increase our costs. Each utility limits what we can display on the bill so we can only display on our web site or in your storage report.
The breadth of Realgy’s experience extends back to the last time such an extreme weather event happened, which was 20 years ago. That is why Realgy offers the services we do to help protect our customers. Even though the market wholesale price in Chicago for natural gas and electricity jumped two to four times, Realgy’s average customer will pay less than a 40% increase for January gas and electricity.
Realgy does three things to consistently protect our customers from normal and extreme weather events:
- Managed Plan–a consistent low price to save money compared to Utility
- Fixed Price–through PriceWatchTM, this year (like the last three years) the Realgy PriceWatchTM Fixed Price was below the average winter price
- Storage (except for Michigan)–Winter gas at Summer Prices is a great way to prepay for winter gas with the added benefit that you do so at the summer prices.
Realgy will continue to do everything possible to continue to meet our customer’s expectations to save money on energy and rely on Realgy.
If you did not receive your PriceWatchTM notice this year, now is a good time to update your contact information with Realgy. You can do this by going to realgyenergyservices.com and filling out the Customer Contact Info Update Form.
Polar Vortex created record demand for natural gas
Written by Michael Vrtis, President of Realgy Energy Services in response to the USA Today article “Arctic blasts create record demand for natural gas”
The laws of supply and demand actually work; cold weather broke a 20-year record, energy consumption skyrocketed, and the prices went up.
Lake Michigan in Chicago, Illinois
How high?
The wholesale costs for January 2014 for deliveries into the Chicago market:
- Natural gas went from about $4.40 to nearly $18.00
- Electricity settled at over $0.750, where it is normally around $.035
Supply went up as the weather caused record energy demand and prices subsequently followed. No one went cold as supply kept up to demand; however, without advanced planning, you paid a lot more.
Realgy’s experience goes back to when we set the previous low temperature record. We were prepared for this eventuality, so our customers will pay far less with the use of Realgy’s ManagedPriceTM, storage, and PriceWatchTM.
Any good news?
Groundhogs Day on February 2, 2014 started with a shadow, so we should see 6 more weeks…but we are halfway through winter!
Check out the article in USA Today: “Arctic blasts create record demand for natural gas”
You’ll never hear us whine about the weather
Written by Michael Vrtis, President of Realgy Energy Services in response to the Chicago Tribune article “Feel free to whine over one of the worst Chicago winters in decades”
Raised as a Chicagoan, I recall blizzards that closed schools for weeks requiring trains to haul the snow out of the city! Of course my kids then look at me and ask about what covered wagons were like.
We were the Windy City and when the “hawk” was out, you had to bundle up. We were proud of being the city that worked hard and then worked harder when it was below zero.
The last few winters certainly have allowed us to think global warming was eliminating such winters. However, this winter will be the first winter in at least 10 years that will finish with average temperatures below normal for each month of winter (Nov, Dec, Jan, Feb, and Mar). During winter, especially winters such as this year, it’s important to be prepared for storms at your home, car, and place of business.
Realgy’s experience goes back to the last time winter weather was this extreme. That is why we have all three services in place; 1) a low ManagedPriceTM or NYMEX+ rate that is consistently below the utilities price, 2) storage gas service that makes possible winter gas use at summer gas prices, and 3) our PriceWatchTM service where our traders recommend fixed prices prior to the season (for 6 of the last 7 years this recommendation has been below the average seasonal price).
Realgy prepares for such storms every season. Our preparation is demonstrated by our consistently lower prices that you can rely on.
And, you’ll never hear us whine about the weather.
Check out the article in The Chicago Tribune: “Feel free to whine over one of the worst Chicago winters in decades”
In Response to “Study: Solar could power more of Iowa’s energy needs”
Written by Michael Vrtis President of Realgy Energy Services in response to the Des Moines Register article Study: Solar could power more of Iowa’s energy needs
Iowa in addition to producing more corn and hogs than they consume could produce more solar energy!
GO IOWA!
In the article such factors as; declining costs of installing solar along with recognition of the environmental benefits (recognized by tax incentives) are driving such rapid growth and adoption of solar energy.
Realgy in completing 2 new installations now has 4 solar projects in Illinois generating 180,153 kWh producing roughly 0.4 % of the total energy we delivered into COMED for 2013…..while a contribution we clearly are no Iowa!
Check out The Des Moines Register article: Study: Solar could power more of Iowa’s energy needs
New Year, New Website
Realgy Energy Services wants to wish all of our customers a very Happy 2014. The New Year usually brings change and this year Realgy is pleased to announce that we have a new home on the web. The address will stay the same www.realgyenergyservices.com but the website has been updated.
Please feel free to check out the new Realgy Website and let us know what you think.
While you are there, please update your contact information to ensure you will receive the latest news and updates on all of our benefits and services.
