July 23, 2018 Dan Levin Energy Markets, procurement

A hot summer puts winter on edge.

The Bottom Line

With the record hot summer continuing, storage of natural gas is becoming an issue. For now, up-to-date prices for electricity and natural gas still compare favorably to 2016 and 2017 rates and present opportunities to reduce costs through both fixed and variable supply contracts.

What to know about 2018

Currently, wholesale natural gas prices are 8% lower than 2017. The summer 2018 favorable pricing may reverse as the year continues. Above normal temperatures cause high gas demand for electric generation to meet cooling needs. This, coupled with increased exports of liquified natural gas (LNG), will reduce the amount of gas available for winter and cause upward pressure on rates. If you have contracts expiring in 2018, we recommend exploring replacement agreements sooner than later.

Why Act Now

The changes in market conditions ahead increase the risk of higher prices and are clear signals to now to assess your supply options for electric and natural gas. Look to protect costs this winter by acting while rates are low.

Temperature Probability Maps

This summer may be the hottest on record. An El Niño effect is forecasted for this fall and winter, which may lower rates by creating milder temperatures. The orange/red in the maps below indicate heat increases from normal. Continued hot weather will cause upward pressure on pricing, while a mild fall and winter can mean low energy demand and low prices.

Summer 2018

 

 

Fall 2018

 

 

 

 

 

Winter 2019