Natural gas prices decrease

The New York Mercantile Exchange (NYMEX) month-end settlement price for December was $4.216 per 1,000 cubic feet (mcf), down from $4.267 per mcf at the end of November.  This means that residential customers who buy their natural gas directly from Dominion East Ohio Gas will see their standard price drop from $5.47 to $5.42 per mcf in mid-January.  We recommend that you stay with the utiliy’s variable rate program if you are not already contracted with another supplier.  If you are under contract for a fixed price that is higher than $6 per mcf, you might want to check and see what the cancellation fee would be.  For more information, see John Funk’s article in today’s Plain Dealer:  Heating costs drop for gas customers

We have been testing light-emitting diodes (LED’s) for residential and commercial lighting uses for some time now and have been quite impressed.  LED bulbs use a lot less power and operate at lower temperatures than incandescent and compact fluorescent (CFL) bulbs.  LED’s have additional advantages over CFL’s: they contain no mercury and the light quality is more like an incandescent.   John Funk had an interesting article in today’s Plain Dealer about a new General Electric (GE) LED light bulb:  LED bulb

While the GE “Energy Smart” LED’s will not be available in stores until January, we have already bought some Sylvania LED bulbs at Lowe’s stores.  For example, I bought a Sylvania G25 at Lowe’s for $29 and a Sylvania A19 for $21.  They both replace a 40-watt bulb and use only 8.4 watts – that’s almost an 80% reduction in electric consumption!  The Sylvania bulbs are dimmable and will last a minimum of 50,000 hours.  By comparison, the GE LED’s are only supposed to last 25,000 hours.

We are now using over 200 dimmable LED bulbs and can lights (manufactured by Affineon, Array, CREE and Sylvania)  in our Shaker Heights home/office and our Maine rental property.  The only type of bulb we have been unable to replace so far is a dimmable incandescent chandelier bulb.  A solution for that may be right around the corner.

As you replace bulbs in your home or office, we recommend that you consider using LED’s.  They are continually coming down in price to make them a more practical solution.  Look for the LED’s that are dimmable and rated to last 50,000 hours because they are the higher quality bulbs.  Contact us if you want more information on the results of the testing we have done with various LED bulbs, in comparison to halogen, fluorescent and incandescent bulbs.

The New York Mercantile Exchange (NYMEX) month-end settlement price for November was $4.267 per Mcf, up from $3.292 at the end of October.  Note that this is just the price for the gas; there will also be charges for basis and delivery.

For residential customers of Dominion East Ohio, the standard variable price will increase from $4.49 to $5.47 on December 14th.  We agree with the following comment from John Funk’s recent article in the Plain Dealer:

“Consumers who buy natural gas through their utilities, rather than independent suppliers, will see prices rice in coming weeks by about 20 percent.  But those people still will pay less than their neighbors who opted for high-priced, fixed-rate contracts.”

We continue to recommend staying with the utility’s variable rates.  Beware of deceptive advertising by marketers who come their fixed rate prices to average variable pricing over several years instead of current variable rates.

We are pleased to announce that Brakey Energy is now considered a woman-owned business.  Cindy Brakey owns 51% of the shares.  You may see our listing on the Ohio Department of Development’s Directory of Women-Owned Businesses at: Directory of Women-owned Businesses

The Public Utilities Commission of Ohio (PUCO) issued a ruling on Wednesday that takes another step toward attempting to resolve the issue of rate discounts for certain residential customers of FirstEnergy who had special “all-electric” rates prior to 2009.  See John Funk’s article in the Plain Dealer for more information: PUCO rules it has jurisdiction.

In response to the recent uproar by special rate customers, FirstEnergy, with the approval of the PUCO, restored some discounts for these customers.  These temporary discounts are accruing a debt of about $80 million per year.

No decision was made about who would pay for these discounts.  The PUCO directed its staff to recommend a long-term solution and provide a range of options regarding the recovery of the utility’s revenue shortfall due to the discounts.  The staff has issued a report with some alternative solutions that would involve shifting the cost of the discounts to FirstEnergy’s residential customers who pay the standard rates.

In our opinion, any solution should include energy efficiency incentives.

For two years, we have voiced our concerns that China controls more than 90% of the rare-earth metals which are needed for wind turbines, solar panels and electric car batteries.   It comes as no surprise to us that China is restricting exports of those metals in order to drive down costs for its own clean-energy industry.   This is naturally driving up the costs in the United States.  We are concerned about the impact of these actions on the cost of renewable energy mandates in Ohio.  You can read more about it in this article from the Detroit Free Press: China blocks minerals shipping, or in this Financial Sense article: China’s rare earth revenge.

The New York Mercantile Exchange (NYMEX) month-end settlement price for October was $3.292 per Mcf, down from $3.837 at the end of September.  Note that this is just the price for the gas; there will also be charges for basis and delivery.

The NYMEX 12-month strip (the average price of futures contracts for the next 12 months) on October 27^th was about $4.  It hasn’t been that low since December 2002.

For residential customers, Dominion East Ohio’s variable Standard Choice Offer (SCO) rate will decrease from $5.037 per Mcf for the month beginning on October 16 to $4.492 per Mcf for the month beginning on November 16.  Variable rates still appear to be the way to go this winter.  Please check your natural gas bill to make sure you aren’t on a high fixed rate contract.  If you prefer a fixed rate contract, you may look for options at the PUCO website.

On October 20, the first of six wholesale auctions was held to determine FirstEnergy’s default generation rates for the period from June 1, 2011 through May 31, 2014.  The auction resulted in the following prices:

• 5.455 cents per kilowatt hour (kWh) for the period from June 1, 2011 to May 31, 2012
• 5.410 cents per kWh for the period from June 1, 2011 to May 31, 2013
• 5.658 cents per kWh for the period from June 1, 2011 to May 31, 2014

The average of these prices, 5.505 cents per kWh, will be weighted 50% in determining the price for the year beginning next June.  A second auction will be held in January, and the prices from that auction will be blended with these prices to determine the default generation price for the period from June 1, 2011 to May 31, 2012.  Additional auctions will be held in October 2011, January 2012, October 2012, and January 2013 to establish the default generation prices for the following two years.

Note that FirstEnergy’s current default charges cover both generation and transmission services.  After May of 2011, the default charges and alternative supplier charges will be for generation only.  The transmission charges will be passed through to the customer.  We estimate that these will be in the range of 0.3 to 0.6 cents per kWh, depending upon load profile.  Thus, any price quotes from alternative suppliers for periods after May of 2011 cannot be compared directly to current rates.

You may read more about this in John Funk’s recent article in the Plain Dealer: Lower power prices.

John Funk had the following article in the Plain Dealer last week about the U.S. Department of Energy’s (DOE) predictions on winter heat costs: Oil, propane costs to rise, natural gas only slightly.

The DOE predicts that homes that heat with oil and propane will see increases of 11% or more over last winter, while homes that heat with natural gas will pay only slightly more this winter than they did last winter.  Natural gas prices have been falling this week.  The NYMEX settled yesterday at $3.43.  Next Wednesday, we will learn the month-end settlement price that will determine Dominion East Ohio’s rate for the month beginning on November15th.   For now, we recommend that Dominion East Ohio residential customers stick with the default variable rates.  If you want to control your risk, we think an alternative supplier’s fixed-price offer should be under $6 before we would consider locking into a contract.

The New York Mercantile Exchange (NYMEX) month-end settlement price for September was $3.837 per Mcf, up slightly from $3.651 at the end of August.  Note that this is just the price for the gas; there will also be charges for basis and delivery.  You may read more about the impact on northern Ohio’s residential customers in John Funk’s article in today’s Plain Dealer: Some consumers will pay a bit more for natural gas

Energy prices can be expected to increase in the future.  Now is the time for homeowners to do what they can to become more energy efficient.  John Funk had a second article in today’s Plain Dealer about how Dominion East Ohio and Columbia Gas of Ohio are helping customers conserve: Natural gas companies have to help you conserve