December 26, 2018 Dan Levin Energy Markets, procurement

A month after the jump, prices are still high. 

The Bottom Line

If you do not have a fixed rate natural gas contract, you could see an estimated 25% increase in your heating and electric bills this winter. Mid-November we saw a significant increase in natural gas prices. You can read more about it here, but the main takeaways: weather drove up demand, the natural gas supply is depleting, and financial speculation of the natural gas market compounded the issue.

Look at NYC multifamily pricing as an example. Over the last two months, gas prices have jumped $.06/therm and electricity prices $.011/kwhr for a 12-month fixed contract. That means a multifamily property that spends about $400,000 per year on electricity and natural gas will see a $24,000 cost increase per year!

If your property remains on ConEd utility rates this winter, the rates are expected to rise even higher. With the numbers we’re seeing (around $.095/kwhr and $.65/therm), this would amount to a cost increase of over $40,000 for heating and electric costs December through March.

We’re recommending a few options at this time:

  1. Short term (2-3 month) winter buys that lock in the high prices for only a short-term
  2. Variable price contracts that allow you to have flexibility for the longer term
  3. Longer-term (24-36 month) agreements that spread out the increased cost for this winter over a longer time period, and save budgets for this winter.

Not sure what’s right for you or your portfolio? Contact us today! We’ll help you weigh your options based on your risk tolerance.

December 18 energy markets