Tag Archives: energy

Brits Turn to Energy-Saving Alternatives as Fuel Prices Continue to Skyrocket

As recent predictions showed that energy bills in England would rise 80% by the end of October, Brits have been thinking outside the box for warm food and heating.

According to GfK’s market research, sales of certain electrical appliances have soared. People have been on the hunt for energy-saving tactics and products to avoid a major increase in their utility bill. The sale of hot air fryers was up 286% last month as compared to September last year, as the portable devices heat up faster and consume significantly less energy than conventional ovens.  In a similar vein, pressure cookers and slow cookers rose 79% compared to last year. As reported by Uswitch.com, these small kitchen machines cost about half of what an electrical oven costs to run – while an average slow cooker costs 13 cents per hour of use, a conventional oven costs 24 cents.

In addition to scrounging to save on cooking techniques, British citizens are thinking of alternative methods to keep warm as winter approaches. Sales of electric blankets have jumped 216% since last September.

As the average yearly household energy bill in England rose 96% percent since last October, the government has stepped in and put a cap on electricity and gas costs for the coming two years. Later, however, new finance minister Jeremy Hunt announced that the cap would be relevant until April only for most households.

When the climbing fuel prices will stabilize is truly up in the air. In the meantime, savvy British residents are managing to do the necessary calculations and adjust their standard of living accordingly

It’s Good to Have Options

The following is a guest article written by Brad Martin, Senior Vice President, Marketing, Mass Market Sales & Services of Genie Energy:

I never really stopped to consider the vast amount of options available for some of the most mundane items we need. Standing in Target recently, I contemplated the purchase of a toothbrush for far too long as I weighed the brands, style, color, bristle stiffness and other options available. I mean, there must have been no fewer than thirty different choices. Shaking her head, a woman next to me who was equally perplexed said, “I’m just going to pick the cheapest one… they all end up in the same place eventually…”

I took her advice.

It’s a different story altogether, as many business owners and managers are struggling with a similar problem when it comes to their energy supply. Aside from the multitude of Retail Energy Provider companies out there offering procurement services versus the local utility company, there are a host of options available that should be carefully weighed, each with its own advantages and disadvantages. Some options include, “block”, “heat rate”, “nodal” and “variable” rate programs. However, in this article, I’d like to review two of the more commonly presented options, “fixed” and “index”, to address management of commercial electricity costs.

Choices… choices…

 A pure fixed rate plan is as it sounds. Your business locks in a fixed price per kilowatt hour (kWh) for some predetermined length of time. A term could be any length of time that provides you the best price and other desired options, taking into account your consumption amount and patterns, load factor, capacity and transmission charges, seasonality and a variety of other factors. (Please see https://www.businessdistrict.com/timing-is-everything/ “Timing is Everything”, a previous piece that explains the importance of term and timing of energy supply agreements). A fixed rate plan can be a good option for a company seeking budget certainty or protection from market volatility.

An index plan gives a business the opportunity to purchase at the varying prevailing market prices for electricity. This can be for as specific a period as each given hour in a day, corresponding to a published market index while fixing the adder to the wholesale energy component. An index plan is a more aggressive product, and would be a fine fit for a company looking for the flexibility to shop around, or for a position that allows them to take advantage of wholesale market price drops. A company may “float” on an index price, constantly watching the forward market for the right opportunity to lock in. While the index might be relatively cheaper to the fixed rate, the index can rise precipitously during peak demand periods in the very cold winter and/or very hot and humid summer periods.

Advantages for some may mean disadvantages for others.

With a fixed rate plan, your price certainty comes with a factor of some variable load cost, which reflects the variable risk the energy provider must take on in its hedge, by offering a fixed price over a period of time. The fully unitized fixed rate plan can also mitigate the risk of the utility’s peak-demand charges on the supply side of the bill as they would no longer apply. Most small/medium businesses will seek the Fixed Price option for budget certainty and the potential for year-over-year savings versus local utility supply pricing.

With an index plan, it’s the customer that absorbs most or all of the risk, and no variable load cost is associated, since pricing is in ‘real-time’. A large commercial or industrial company (i.e. manufacturers) may seek an index price option (or hybrid, also referred to as a ‘block’ plan, with only a percentage of their load on an index plan), where consumption is large enough to make it worthwhile to change consumption patterns based on anticipated hourly prices. They may opt for example, to use more electricity during off-peak hours (overnight).

While it may be good to have options…

…It’s best to take advantage of the expertise of an energy broker or supplier that can provide you with the analysis and recommendations suited to your business and specific usage patterns. No one option may be right for another business owner, and while there is the potential to realize reductions in your energy overhead, there is no reason to go it alone!

Own or manage a business that uses energy or know someone who could benefit? Message me to get connected with an energy expert who will provide a complimentary commercial energy analysis with no obligation.

Brad Martin is Senior Vice President, Marketing, Mass Market Sales & Services of Genie Energy

About Genie Energy Ltd.:

Genie Energy Ltd. (NYSE: GNE, GNEPRA), through its Genie Retail Energy (GRE) division, is a leading independent operator of retail energy providers and commercial brokerage services.  GRE’s providers supply electricity and natural gas to residential, small business and commercial customers in deregulated markets in the United States and the United Kingdom.  For more information, visit http://www.genie.com/.


Timing Is Everything

The following is a guest article written by Brad Martin, Senior Vice President, Marketing, Mass Market Sales & Services of Genie Energy:

Small, medium and large business owners and managers can benefit from shopping around for commodities like electricity and natural gas. However, what many fail to consider, is that simply comparing today’s available rate to the utility’s current price to compare, may not be enough of an advantage to look for. Switching away from the utility to a supplier offers a host of rate structure options and terms, affording more control over your energy experience.

Many factors influence cost. Among the variables are some obvious items such as the commodity, geography, utility, status of natural gas reserves, and weather. Other not so obvious factors to the layman are transmission, capacity tags, and load factors. However, contract start date and term length are also critical and should not to be overlooked.

Consider this – Let’s say your business is evaluating a twelve versus eighteen month termed agreement for electricity, with the twelve month term set to end next April. Taking all the current market conditions into consideration, a twelve month rate lock for electricity may be more favorable versus an eighteen month term. Why? The eighteen month term would straddle two summer seasons, and because your total electricity consumption and spend often increases in the summer months (June through August), this could impact the hedge for your supply. On the contrary, if you are looking at an eighteen month natural gas contract beginning in November/December with it ending in the spring – the benefit could be favorable, with the hedge covering only one typically higher consumption winter heating season.

As they say, “…timing is everything…”

While a longer term “set it and forget it strategy” might appeal to some seeking budget certainty and those looking avoid market volatility by flattening out commodity market highs and lows, it should be noted that timing of contract end dates are important to consider. The spring and fall months are considered “shoulder seasons” due to their more mild temperatures. Contracts ending during the shoulder season may provide opportunities to lock in a better rate in the renewal term, since mild temperatures often mean a factor of less demand and better wholesale costs.

No matter how large or small your business, it’s important to weigh the benefits of securing your electricity and natural gas supply from a source other than your local utility company. It can be very much worth it to take a few minutes to shop around. Compare rates, plan structures, terms, and more.

Of course these examples illustrate just a few of the more straightforward scenarios. Your sweet spot could be a ‘typical’ 12/18/24/36 month plan, or it could be a more tailored fixed, index, block and index (Hybrid) or even variable with cap price plan. Some programs may even lead to a reduction in or elimination of peak demand charges.

But until you shop, you may never know.

Keep in mind, while no one can ever predict the future with certainty, it is important to work with a proven broker or supplier that will review your specific historical usage patterns, and provide options based on a true consumption profile.

Own or manage a business that uses energy or know someone who could benefit? Message me to get connected with an energy expert who will provide a complimentary commercial energy analysis with no obligation.

Noble Group Selling Off US Energy Business to Calpine Corp.

In order to generate cash and improve liquidity, commodity trader Noble Group Ltd. Inked a deal to purchase its American energy business to US power generation company Calpine Corporation for $1.05 billion.

The deal is the latest action in a series of undertakings designed to lower its debt as well as improve its reputation. Shares of Noble have staggered badly since February 2015, when an anonymous research group accused it of questionable accounting methods. Noble insists it did nothing wrong, and even accelerated disclosures. Poor showing of commodity prices did not help the poor earnings experienced by the company.

Therefore, in order to create cash and ease liquidity, Noble announced a series of sales of assets and reduced expenditures.

In a statement released to the Singapore Exchange, Noble announced that it will receive $800 million for Noble Americas Energy Solutions. It will be paid an additional $248 million for the US unit’s working capital.

Calpine describes itself as America’s largest generator of electricity from natural gas and geothermal resources. In July it its third quarterly loss in a row.