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$8.3 Billion Proposal for Addressing Texas Blackouts

Berkshire Hathaway is a public company that owns several utilities. Their proposal illustrates the difference between a company taking risks versus a utility.

Berkshire is proposing the Texas Grid operator (utility oversight company) build a gas-fired power plant that would be weather normalized and fixed to support a large portion of Texas’ energy demands. Berkshire is proposing to spend $8.3 billion to build this plant.

The cost: Berkshire would earn what a Texas utility earns on investments which is 9.3%.

So, Berkshire like any utility in Texas that receives regulatory approval, earns a return regardless of whether what they build works.

Berkshire as a public company takes risks building and operating businesses such as Dairy Queen, Burlington Northern Railroad, or Sherwin-Williams. Any investment in these businesses comes with no guaranteed return.

EVERY utility makes money by spending money to provide service. The Texas Grid operator will undoubtedly not accept this proposal but, it does show the difference between private businesses and utilities.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://www.msn.com/en-us/money/markets/buffett-s-berkshire-floats-8-3-billion-fix-for-texas-grid/ar-BB1eXRHl?ocid=spartan-ntp-feeds

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Gas and electric prices soar; billing impacts, utility pricing to increase, investigations begin

Weather always impacts energy markets. Massive weather changes impact National energy markets.

The latest Polar Vortex of February 2021 covered nearly 2/3 of North America. The result in the energy markets was immediate. Customers used more energy to stay warm. Utilities demanded more energy to meet demand. Pipelines and electric lines had massive draws.

Prices increased. However, electric generation could not respond as some weren’t winterized and couldn’t start. Gas pipelines originating from Texas and Oklahoma restricted gas supply leaving those states. This resulted in gas pipelines not delivering the request for more gas.

Prices soared, utilities and gas pipelines declared the results of the polar vortex as an unforeseeable circumstance or force majeure. THIS ALLOWED them to make demands and pass-through costs without restraint.

Realgy DOES NOT benefit from any of these events. OUR COSTS to pipelines and utilities went up nearly 10 times. These costs are just passed through. IT’S PAINFUL for us and you, we understand that.

So, energy suppliers feel the costs first. Realgy has to pay our pipeline and supplier for February 2021 gas and delivery already. It’s 10 times what we planned, we had to borrow money to pay these energy costs.

Utilities have seen these costs and will pass them through to their utility supply (gas and electric) over the coming months.

The impact of the February 2021 Polar Vortex:

Yes, every energy supplier marketer/utility suffered higher costs. Yes, every marketer/utility will recover these costs. Yes, utility rates will go up to collect these purchases.

Realgy is doing everything possible to recover only the costs associated with the pipelines and utilities declaring the force majeure. We will offer relief to our customers to help.

Here is a typical reply from utilities:

“Over the last two weeks due to the extreme cold and the incredible demand on the system due to the wintry weather across the nation including Texas, we had to go to market to meet demand above our base plan and we did see higher prices due to the extreme cold that extended into Texas and impacted gas supply.” Sandstrom added he does not know yet what the customer billing impact is going to be but will be working with their regulators to help mitigate impacts to customers. “I also want to clarify that we don’t profit from higher natural gas prices, we are just a distributor and our commodity costs essentially get passed through to our customers. We definitely saw a price spike in the commodity costs for a few days, but bills will tend to be higher regardless as customers used more gas to heat their homes during the polar vortex.”

The investigations are beginning:

State level:

In a letter sent Saturday to federal regulators, Smith said the price spikes will not harm just consumers but, could “threaten the financial stability of some utilities that do not have sufficient cash reserves to cover their short-term costs in this extraordinary event.” The letter was sent to the Energy Department, Federal Energy Regulatory Commission and the Commodities Futures Trading Commission. A copy of the letter was obtained by The Associated Press.

The Federal Energy Regulatory Commission (FERC) announced today that its Office of Enforcement is examining wholesale natural gas and electricity market activity during last week’s extreme cold weather to determine if any market participants engaged in market manipulation or other violations.

If the Office of Enforcement finds any potential wrongdoing that can be addressed under FERC’s statutory authority, it will pursue those matters as non-public investigations.

Federal level:

FERC explained that this examination will take place as part of the Division of Analytics and Surveillance’s (DAS) ongoing surveillance of market participant behavior in the wholesale natural gas and electricity markets. The Division uses market participant-level trading data and data from the financial markets to screen daily and monthly trading at the majority of physical and financial natural gas trading hubs in the US and the organized and bilateral wholesale electricity markets. DAS closely identifies and scrutinizes any potentially anticompetitive or manipulative behavior to determine if an investigation is appropriate.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information:

https://www.wdio.com/duluth-minnesota-news/natural-gas-utlities-price-spike-impact/6022819/

https://www.myjournalcourier.com/insider/article/Cold-snap-wanes-but-massive-bills-in-offing-for-15974019.php

https://www.fox9.com/news/concern-grows-for-possible-high-energy-bills-after-spike-in-natural-gas-prices

https://www.msn.com/en-us/news/us/senator-seeks-probe-of-natural-gas-price-spikes-during-storm/ar-BB1dRvPl?ocid=uxbndlbing

https://www.ferc.gov/news-events/news/ferc-examine-potential-wrongdoing-markets-during-recent-cold-snap

https://news.wttw.com/2021/02/20/senator-seeks-probe-natural-gas-price-spikes-during-storm

https://wgem.com/2021/03/03/illinois-congressmen-seeking-investigation-federal-relief-for-surging-natural-gas-prices/

 

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Brutal Cold grips central United States

Temperatures have dropped more than 40° below the average.

Power costs have soared from $4 / MWh to over $600 / MWh.

Most of the news we are seeing is coming from Texas for several reasons:

  1. Well, it is really cold; well below freezing for nearly 5 days.
  2. Texas is a power island. They have no connections outside of Texas so, other states cannot supply power for them.
  3. Texas’ energy infrastructure is not built for freezing temperatures. This results in water main breaks, gas pipes freezing, and power equipment not operating properly.

Outside of Texas the Polar Vortex will have economic impact but, electricity and gas are generally staying on.

If your power or heat is interrupted, CALL your local utility.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://www.nytimes.com/interactive/2021/02/16/us/winter-storm-texas-power-outage-map.html?action=click&module=Spotlight&pgtype=Homepage

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How Extreme Cold Turned Into a U.S. Energy Crisis

Over the past several days, extraordinary cold weather in the US from a polar vortex caused record temperatures across the country. Electricity and heating fuel costs skyrocketed while energy demand hit record levels. Millions of customers dealt with blackouts for the first time in a decade. Gas lines seized, wind turbines froze, and oil wells shut in. Across the grid in Texas, all energy sources had problems with some reasons still unknown. Texas’s emergency state will allow for more resources to become available and ensure residences, medical facilities, and related consumers are the priority to receive fuel first. The energy market in Texas is one of the most competitive in the US and power providers have to be prepared for extreme events such as this one. If not, they are set up for failure. Texas and Washington policy makers may need to review their system and make some changes to ensure a similar crisis is prevented or handled better.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://www.bloomberg.com/news/articles/2021-02-15/how-extreme-cold-turned-into-a-u-s-energy-crisis-quicktake

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Tips to Lower Your Utilities This Winter

Here’s your bi-annual reminder to make some improvements around your home or business to save money on utility bills. Winter brings about colder weather for most of us North Americans and with that comes an increase in energy usage. There are more ways to conserve than just turning down the thermostat. You can seal any air leaks around windows and doors. Try to also keep them closed as much as possible to prevent losing the warm air created inside. Use the sun to your benefit by keeping curtains open to let the warm sunlight in but, keep them closed at night to reduce heat loss. Insulating your water heater and using your fireplace and oven will also be to your advantage. Among other tips, you can check out your utility’s website to find incentives and home assessments to see where you might be able to increase energy efficiency and savings .

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://ourcommunitynow.com/home-and-garden/start-a-winter-garden-to-keep-the-blues-away

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One company’s grand plan to help suppliers club together to buy green energy

What do long-term global or local businesses do when they see a problem? They solve it.

Climate change impacts lives today and is forecasted to accelerate its negative impact through increased storms, draught, fire, and hurricanes. Using the tools and abilities within their disposal, governments and businesses have responded to face this challenge.

Governments around the world agreed collectively to reduce emissions; see the Paris Agreement. The goal is for each country to reduce its emissions over 50 years.

Businesses are moving to reduce their carbon emissions by committing to renewable energy. A large company example is Walmart. In 2005, Hurricane Katrina devastated New Orleans and Walmart committed to sustainable energy. Fast forward to 2020, that commitment has translated to reduced waste and 29% of its electricity coming from renewables. Walmart’s aim is to use its initiative to create an alliance of companies that commit to renewable energy regardless of size called the Renewable Energy Buyers Alliance.

Seeing a problem and addressing it provides for opportunities. Walmart is reducing costs to operate its business while reducing waste and greenhouse gases that contribute to global warming. Win-Win-Win.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://www.cnbc.com/2020/10/23/walmart-wants-suppliers-to-buy-renewable-energy-collectively.html

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Amazon pledges $2 billion fund to invest in clean energy

Jeff Bezos, Amazon’s founder has constantly made rounds in the media for years. His recent projection of becoming the world’s first trillionaire created an uproar. However, the conglomerate has just promised to invest $2 billion towards green energy. Due to their large extent of worldwide business, their footprint has a significant environmental impact protested by many activists. Focusing on zero carbon, sustainable development, and a better future, Amazon has pledged to be net carbon neutral by 2040. Let’s see if any other retail giants follow suit in the next few years.

Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan, Indiana and Ohio. 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. Service Plans include Guaranteed SavingsTM, ManagedPriceTM, ManagedGreenTM Index, Fixed and PriceAssuranceTM.

Realgy owns and operates 7 solar plants in Illinois and is looking to invest in additional locations.

Additional Information: https://www.nbcnews.com/tech/tech-news/amazon-pledges-2-billion-fund-invest-clean-energy-n1231854

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