Electricity Is Still A Bargain, But for How Long?

September 2016

Natural Gas prices are up 30% since their low point on March 2nd. Electricity prices typically follow Natural Gas, but they didn’t do so. We are still looking at the lowest electricity prices since 2013. 

OUR RECOMMENDATION

Electricity: If you have an electricity contract due for renewal between now and the end of 2017, this is an excellent opportunity to lock in savings and reduce market exposure for the next 3-4 years.

Example: We held an electricity auction for one of our larger manufacturing clients earlier this quarter, and, on an energy spend of about $5 million/year, they saved over $1 million/year. Not everyone will get exactly the same savings, of course, but our average price reduction across 100 auctions that we’ve held this year has been 15.3%.

Gas: When you look at gas prices since March of this year, they’ve gone up 30%, but when you look at them over the 5-year period on the attached graph, they’re still excellent – comparable in fact to April 2012 prices, which were the lowest prices in10 years!

Nevertheless, we advise that you wait for a market dip in the fall to buy. In order to do this effectively, you need to have us load your data now – this allows suppliers to price within a day. Otherwise, it can take a week for them to provide pricing, and the market can move 8-10% in a few days.

Please take a close look at the attached document, where we have explained this historic anomaly in more detail.

Ann Salzberger, Controller/HR Director, Wolfe Dye & Bleach Works, Inc.

“AEP recently offered MAEA members a complimentary consultation, and we decided to take advantage of this offer. Ultimately, we locked prices with them – pleased with their work to get us the lowest quotes, range of suppliers, honesty about commission, and presentation of choices”

Ann Salzberger, Controller/HR Director, Wolfe Dye & Bleach Works, Inc.

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Call Us Today for a No-Obligation Conversation: Kit Gutteridge, President, AEP 484.406.5400 x101