CES Pricing: Get the Best Out of Your Bids
|
|
By Max Webb, Managing Director of Pricing Analytics & Lydia Jopp, Senior Pricing Associate
Energy procurement is at the foundation of our work at Competitive Energy Services. Since 1999, we have competitively and independently procured energy commodities on behalf of our clients. Our procurement process is a collaborative approach largely driven by our Energy Services Advisors and Pricing teams with our clients’ interests and needs always top of mind. As we look forward to the new year, we would like to review the procurement process we use here at CES.
The procurement process is a never-ending cycle due to our clients’ needs, and energy market conditions. The first point we always make to our clients is that it is impossible to predict the best time to lock in an energy contract. Never trust anyone who tells you different. This is why we believe it is important to be as proactive as possible in understanding our client's objectives when it comes to energy procurement. At the beginning of each year, we review all contracts with terms ending in the coming year. That number serves as the baseline for the procurement work ahead. In addition to the contracts ending in the coming year, we often price out contracts multiple years in advance for clients that prefer longer-term periods of price stability. Starting the process early may be related to managing specific customer needs but it also allows us to take advantage of market conditions that achieve client objectives.
|
|
MA DOER’s APS Straw Proposal: Recapping Outlined Changes and Identifying Future Opportunities |
|
Historical Policy Overview
In 2009, the Massachusetts Department of Energy Resources (MA DOER) passed the Alternative Energy Portfolio Standard (APS) to help support new energy systems in Massachusetts that increase efficiency and reduce the need for conventional fossil fuel generation. Similar to a Renewable Portfolio Standard, the APS incentivizes the adoption of qualified technologies by requiring competitive electricity providers serving load in Massachusetts to cover a fixed percentage of total electric load with Alternative Energy Certificates (AECs). Owners of enrolled APS technologies generate the AECs that are sold to utilities to meet APS compliance obligations. The sale of AECs helps produce the revenue required to fund the development of eligible APS technologies. The actual price received per AEC sold can vary according to supply and demand fundamentals. To date in the APS program, a majority percentage of total AEC generation has been produced by eligible natural gas-fired combined heat and power systems (CHPs).
|
|
Figure 1.
Beginning in 2018, the price of AECs plummeted as new CHP plants achieved commercial operation. As these new plants came online, the supply of AECs began to outstrip demand. Several eligible projects were built on the expectations that the sale of AECs from 2018 through 2021 would trend much closer to $20, a price level that is often viewed as the incentive level necessary to make new geothermal and other renewable thermal technologies economically viable. The significant decline in AEC prices, as shown in Figure 1, led the MA DOER to conduct a 2020 APS Review. This review outlined the reasons behind the fundamental supply and demand imbalance in the program. A key takeaway from the DOER’s study included that the APS would have a worsening supply and demand outlook if left unchanged, largely because CHP generation is expected to continue to produce the majority of future annual AEC supply.
|
|
La Niña’s Here: How to Protect Your Business
|
|
If you’ve been waiting since last spring to get back on your skates, skis, and sleds, the slow arrival of winter must feel like an utter disappointment – wishing for cold and snow that is taking its good old time to arrive. On the other hand, if you’re closely watching energy consumption and costs for your home or business, you may be on a bit of a roller coaster ride – a result of fluctuating weather predictions that impact current and future market prices. Depending on your point of view and where you live, the rest of this winter will either be a gift or feel more like a bad dream. Let me explain why.
For starters it should come as no surprise that the continental United States experienced a dueling set of conditions through the first few months of the cold weather season. The Northwest had its wish granted with a decent amount of snowfall, whereas the Eastern half of the United States could not shake the mild fall temperatures until very recently.
As the old saying goes “what goes up must come down.” That adage could not ring truer during a La Niña winter. New England is now experiencing an increased precipitation (both rain and snow) and a downslide in temperatures, some of the coldest we’ve seen in recent years. From an energy commodities perspective we still have several mountains to climb before being able to breathe a sigh of relief, as there is a lot of winter left on the ledger. Whether it’s Henry Hub natural gas, local Basis markets, or distillates, old man winter is now in the driver’s seat threatening the bottom line for most businesses.
|
|
CES to Speak/Exhibit at CampusEnergy Conference
|
|
Competitive Energy Services’ Zac Bloom, LEED® GA, Vice President and Head of Sustainability & Renewables and Eben Perkins, Vice President, Consulting Services are selected to speak at the CampusEnergy 2022 Conference, which will be held at the Westin Boston Seaport District Hotel in Boston, MA from February 15 – 18.
All conference attendees are invited to visit the CES booth on the trade show floor to chat with Senior Vice President, Energy Services, Keith Sampson, and Director of Strategic Partnerships & Senior Energy Services Advisor, Larry Pignataro, about your energy needs!
|
|
On Thursday, December 2, Energy Services Advisor, Zack Hallock, had the pleasure of once again joining the Association for Facilities Engineering (AFE) Chapter 33 for their monthly meeting. In addition to the invaluable opportunity to meet and network with fellow members of the Chapter, this month’s event included a tour of the USNS Seay Vehicle Cargo Ship in Boston, MA. As always, a resounding thank you to AFE for hosting us. We look forward to joining in on 2022 events soon!
Photo by: Zack Hallock
|
|
|
Through Road Trip, Competitive Energy Services features various energy infrastructure projects – road trip style. We have always enjoyed visiting and learning about the physical energy infrastructure that powers our world. Our colleagues, families, and friends are often subject to detours on business trips and family vacations. |
|
CES Staff Updates & New Hires
|
|
CES is pleased to welcome two new staff members to our team, Jeff Endler as an Energy Analyst, and Henry Toulmin as a Data Analyst. We are also thrilled to be welcoming back Eloise Bickham who will be resuming her role as Pricing Analyst, and Tyler Watson who will be transitioning from his previous position as Data Analyst to his new role as Product Developer.
|
|
Eloise Bickham
Eloise Bickham first joined CES as a Pricing Associate in 2017 and returned to CES in 2021. She holds a Bachelor of Business Administration from Southwestern Oklahoma State University.
|
Henry Toulmin
Henry Toulmin joined CES in November of 2021 as a Data Analyst. He is a recent 2021 graduate from Colby College with a B.A. in Environmental Science.
|
|
Jeff Endler
Jeff Endler joined CES in October of 2021 as an Energy Analyst. He is a 2020 graduate from Colby College with a B.A. in Government and Environmental Policy.
|
Tyler Watson
Tyler Watson first joined CES in 2015, transitioning from Data Analyst to Product Developer in 2022. He is a recent 2021 graduate from the University of Colorado with a B.S. in Information Systems.
|
|
Staff Picks: Andy's Pick...
|
|
As the United States is currently making a shift in energy, we are finding renewable energy sources such as wind and solar gaining in popularity. In Superpower: One Man's Quest to Transform American Energy, Russell Gold tells the story of Michael Skelly, who started in the wind power industry in 2000, when this concept was not well-known or accepted. He follows Skelly’s journey as a pioneer of energy and his steps toward revolutionizing the American energy industry, including those who aided him along the way – and his success in creating the second largest wind power company in the U.S., Clean Line Energy. Superpower provides an in-depth and captivating look at one man’s persistence of innovation to change the way we look at renewable energy.
|
|
In Pulitzer Prize-winning Michael Hiltzik’s “Colossus: Hoover Dam and the Making of the American Century,” we dive into the conception and creation of the Hoover Dam and its impact on the United States. The Hoover Dam marks a turning point in American history, as the development of this machine ushered in a time of collaboration for communal good amidst the Great Depression. Following the historical figures behind the project, President Theodore Roosevelt, William Mulholland, Herbert Hoover, Frank Crowe, and Franklin Roosevelt, Hiltzik tells the story of the efforts and determination these men demonstrated against Congressional resistance to bring the dam to life, and in turn, become a symbol of American resilience.
|
|
|
|
If you have a pressing energy question, or would like to hear about a particular topic in a future edition of the CES Insider, please contact us on our website today. We look forward to hearing from you! |
|
|
|
|
|
|
