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Multi-Housing News - Making Your Mark

 

Multi-Housing News (MHN) recently reached out to AUM's Dimitri Kapsis for insight regarding benchmarking in our industry. 

Below you will find the article where Kaspis speaks on behalf of AUM and sheds a light onto AUM's experience with benchmarking in multifamily.

 

Making Your Mark

By Joshua Ayers, Senior Editor - Published November, 10 2014

Most operational tasks at multifamily communities strive to maximize efficiency in order to increase the bottom line. The web-based revolution in the past 10 to 15 years has helped these businesses to streamline their operations and as that technology evolves, companies are taking a closer look at, and improving, the ways they are spending money on property utilities through benchmarking.

So what is benchmarking? Putting it simply, benchmarking is the process of taking an entity’s specific set of metrics and measuring or comparing those metrics to the metrics of another entity or the average of metrics of other similar entities. In multifamily—and commercial and industrial buildings as well—an example would be taking the total use of electricity at one building and comparing that usage against other similar buildings, or the average usage of multiple buildings that are similar in stature.

While this might sound relatively simple, there are several factors that make utility benchmarking at multifamily communities and buildings more difficult than their commercial and industrial counterparts, including sub-metering, resident privacy and the willingness of utility companies to cooperate with requests for accurate data. Having the right tools, finding the right benchmarking vendor and being aware of local, state and federal benchmarking efforts can all help companies to build a benchmarking strategy that will help reduce utility costs and increase NOI.

A few vendors and tools

In order to effectively benchmark utilities, a company needs nothing more than a method of collecting, analyzing and storing the data, as well as a way to determine how other similar multifamily properties are consuming in order to track results. An initial gut response might include opening up Microsoft Excel or signing into Google Drive, but, unfortunately, the labor costs for tedious manual data entry for benchmarking would likely outweigh any savings that could be had, and there would be no guarantee that the data could be appropriately analyzed.

“This can be done in spreadsheets, but it is time consuming and tedious, and the analysis required to do it accurately is not as simple as adding up utility bills,” says benchmarking guru Jonathan Braman, vice president of the New York-based benchmarking company BrightPower. “For example, in climates with a lot of heating or cooling needs, building energy consumption varies a lot based on how hot the summer [is] or cold the winter is. If I installed a new efficient boiler before last winter’s polar vortex, I still probably used more gas than the previous winter. I may have used less than I would have with the boiler—but utility bills alone won’t show that.”

BrightPower is just one of many benchmarking companies that have emerged in the multifamily industry. One tool that the company offers its clients is its EnergyScoreCards platform, which automatically fetches data from most large utilities, and then “provides weather-normalized benchmarks at the building, property and portfolio levels,” he notes.

Braman says that the use of EnergyScoreCards has helped long-term clients decrease utility spending since they started using the project, but he also notes that the benchmarking alone isn’t necessarily a cause for energy saving.

That combined with working with BrightPower analysts can help companies sort through the data. If consumption problems are evident, BrightPower engineers and procurement experts help clients work through the problem.

“Benchmarking only helps owners make better decisions and take action to save energy,” he says. “We think of benchmarking as a critical component of energy management, but it must be combined with smart operations and maintenance, behavioral changes, and in some cases, capital improvements, to save energy.”

Another major player in the benchmarking industry is American Utility Management (AUM) Inc., which has been providing energy management solutions to the multifamily industry since 1994.

AUM Chief Energy Officer Dimitris Kapsis says that the most important tool for benchmarking is good data.

“The most essential tools for benchmarking is the availability of the actual comparative data, its integrity and overall size of the comparative group,” he says.

AUM’s primary benchmarking tool, SCORE, utilizes data captured from a state-of-the-art data capture process that checks the data’s integrity, and then provides benchmarking that takes into account geographic region, property type and other property characteristics and their overall utility usage to rate a property’s energy efficiency again similar peer groups.

Kapsis stresses the importance of the data integrity checks, since manual data entry can be flawed, as can data that comes directly from the utility companies.

“It could be a situation where we have some data entry issues such as fat fingering, or we even have data issues coming from the utility, because unlike the popular consensus, utilities make mistakes and sometimes [they] make big mistakes,” he says.

Once the data is validated and entered into the system, AUM’s system monitors the data for anything that is out of trend, including utility usage.”

“It’s pretty straight forward. We put some variances in place up or down, and if they break through those barriers that we manually set into the system then the system notifies us,” he says. “We look into it as to if it’s a legit variance. If it is, we let it go through the system and the client receives a notification. From there, either themselves or with our help, we can work on fixing the issue.”

Kapsis referenced an AUM Energy Management client with a portfolio of more than 100 properties that was able to identify conservation opportunities through benchmarking efforts that led to $400,000 in annual savings with a ROI in just 13 months.

NWP, which offers benchmarking through its analytics portfolio, offers a product called ScoreCard, which allows clients to rank a property within a portfolio to see how it is doing against its peers.

ScoreCard also takes into account factors such as weather normalization, and benchmarks several utilities both individually and combined.

“You can look at gas, electric and then a combined gas and electric,” says Chris Dorando, product manager for NWP’s Utility Smart product line. “So for instance, if you’re a property that has electric heating and you want to know how that property is performing against other properties in the area that have gas heating, we normalize that so that you can actually make a comparison.”

NWP also works with clients that use the EPA Energy Star Portfolio Manager, which anonymously tracks whole-building energy and water consumption data that can be used for benchmarking.

All three energy management and consulting companies, BrightPower, AUM and NWP, are service and product provider (SSP) partners through the Energy Star Portfolio Manager program. According to Energy Star, SSP partners “have demonstrated their expertise and achievements by meeting strict Energy Star program requirements for benchmarking customer buildings using Portfolio Manager and gaining Energy Star certification for buildings.”

Challenges and the future

Utility benchmarking has been around since the 1990s, but was primarily restricted to more commercial buildings, where whole-building consumption data is easier to acquire and track.

Even though an assortment of industry suppliers have assisted EPA in creating and improving the Portfolio Manager, whole-building data remains one of the biggest challenges for multifamily due to property complexity and the various types of metering structures set up at those properties.

“The main difference between the rest of the industry and multifamily, especially when we’re talking about commercial or retail, is that each individual unit-—an individual unit could be a retail shop or an entire office building—tends to have central metering for electric, gas and water. So, when we capture the data, we know what the entire unit is using on a per-month, quarterly and annual basis.”

This type of cumulative data makes a platform like Portfolio Manager easy to use and compare to other similar properties by type and region.

With multifamily, however, properties can range from garden-style, to high-rise buildings and beyond, with each of those different types of buildings. Utilities across the spectrum can be measured across the entire property, such as water, which tends to be measured by whole-building, combined with utilities such as gas and electric, that are measured in either entire building or individual apartments or somewhere in between.

“To be able to compare apples to apples for a particular property, it’s not just location and type of property, it’s also what type of metering they have in place. And, not just for one type of utility, it could have a diversity of metering types depending on what utility you’re looking at … that was the difficulty that the EPA had up until recently and they still do.”

Currently, whole building data can only be acquired from utilities that have willingly agreed to provide the information in good faith or that have been mandated by
cities to provide the information, with the first option being subject to a variety of
data discrepancies.

“Benchmarking laws in several cities have also helped owners and vendors to improve the process and greatly expand the number of properties benchmarking,” BrightPower’s Braman says.

Kapsis, who notes that owners are gravitating toward individual metering for gas and electric as residents demand more control over factors like individual unit climate settings and knowing their own utility usage, is in agreement that the availability of whole-building data will help with benchmarking.

“As a result of those mandates, we will be able to capture whole-building data,” he says.

Dorando believes that the mandate trend is not going to fade away anytime soon.

“As those urban areas like Seattle and New York and Washington D.C. [and] Chicago start to roll out, I think you’ll start to see a lot more of that happen across the country,” he says. “Other communities will start to follow that. It’s something that’s going to be happening, and it’s something that we help our clients with. It’s pretty cutting edge at this time. I think it’s going to be a valuable tool for the property owners because they’ll be able to really improve their properties.”

As this whole-building data becomes more accessible to vendors and their clients, more research and evidence on the effectiveness of benchmarking will become available to owners and operators.

“People used to say, rightly at the time, that there were no good databases of multifamily energy and water use data, so no one knew what was good or bad,” Braman says. “Now we know.”


Energy Commodity Purchasing Outlook - November, 2014

 

11-7-2014_11-40-43_AM

natural_Gas_Buyers_Guide

11-7-2014_11-41-41_AM

 

Injection Season is Over – Stockpiles Higher than Expected

The traditional Injection Season has ended and gas storage levels saw a healthy jump in October, up 583 BCF.  Some experts still expect a couple more weeks of storage injections through the middle of November. This past April, storage levels were 55% below the five-year average and no one expected injection levels to get  anywhere close to those historic levels.  But strong injections through the summer lifted stockpiles to within 6% of the five-year level.  The robust injection season has alleviated some of the supply concerns going into this winter season. 

A word of caution, colder temperatures are predicted for the first half of November, which could result in gas constraints or possible withdrawals in November.

11-7-2014_11-44-04_AM

Weather Forecast

Near Term Unseasonably Cold Temps – Overall, Not a Rosy Picture

Northeast & Mid-Atlantic: Repeat of Last Year?

Forecasts indicate similar cold and snow to last winter.  Expect cold surges in November, with Polar Vortex temperatures hitting in January and February.  Higher than normal snowfalls are predicted west of the I-95 corridor.

11-7-2014_11-47-04_AM

Southeast, Gulf States & Tennessee Valley: Concerns over Rain & Ice.

Expect extreme ice events from Texas to eastern Kentucky in January through early February. A very wet winter is predicted with possible risk of flooding from large storm systems. The current weather pattern sets up Florida for significant and severe weather potential in mid- to late winter.  Tornadoes will be possible from mid-January to February.

Midwest, Ohio Valley, Northern & Central Plains: Dry & Less Harsh.

Expect several cold months for the Midwest, although not as extreme as last winter.  Below-normal snow fall totals are predicted.  The Northern and Central Plains are expected to see temperatures on a roller-coaster; up and down all winter; lessening risk of high total snowfalls.

Northwest & Northern California: Some Precipitation, but Not Enough to End the Drought

California has seen its fourth year of drought and is in dire need of precipitation.  In California, the Northern Sierra and Sierra Nevada, rainfall is predicted to be below normal.  December will bring some rain to northern California, but eases off in the following months, making the region drier than normal by February.  After a season of intense wildfires, the precipitation that reaches the Northwest will not be enough to prevent problems next year.  Southern California looks to see slightly above-normal precipitation this season, especially in areas farther from the coast.

Southwest & Southern Plains: West & Rainy; Possible High Snowfalls

A weak El Nino may bring high rains to the Southwest.  The Four-Corner region, as well as Northwest Texas, Oklahoma and Kansas, may get above-normal snowfall totals.

 OVERALL: Weather is NOT expected to be friendly to energy prices this winter.

11-7-2014_11-48-22_AM

What is the Polar Vortex?11-7-2014_11-49-45_AM

A polar vortex is a persistent, large-scale cyclone located near either of earth’s geographical poles.  The polar vortices are located in the middle and upper troposphere and the stratosphere. On occasion, the cyclone slip down away from the North Pole and brings with it frigid temperatures and “Polar” conditions.

Energy Prices

Prices Climb for 7th Day in a Row

For the 7th day in a row, natural gas spot prices for December have risen; as high as $4.315 per MMBTU. NYMEX Futures prices traded as high as $4.325 per MMBTU.  October trading began at $4.003/MMBTU. Despite positive storage reports, the forecast of cold weather have driven prices up.  Bullish speculators are betting on the cold winter weather to increase early-winter demand for heating fuel.  Analysts are concerned if we get a repeat of last winter, storage supplies will dry-up quickly. In addition, the pipeline bottlenecks from last year have not been corrected, resulting in constraints on gas deliveries and price spikes if storage levels drop significantly.

11-7-2014_11-52-58_AM

Bottom Line

Predictions of Another Harsh Winter Have Driven prices Up.

Even when we get good news from a solid natural gas injection season, prices still climb.  Mother Nature has spoken again and her threat of bad weather has started November off with a significant price spike of over 30¢ per MMBTU in the last 30 days.

Congrats to those who locked in prices in October!  The early November cold spell has driven prices up.  We suggest you quickly lock-in prices before temperature  forecasts get worse. By the way, we have seen predictions of gas storage WITHDRAWALS in November. It’s way too early to start removing significant gas from storage.

A quick note for our New England Clients; electric default pricing for the upcoming winter months is topping $0.20 per kWh in many jurisdictions, forecasts of 20-30% year over year increases in electric costs have flooded the market.  There is still time to lock in lower rates for a December contract start but the window is getting smaller.

 natural_Gas_Buyers_Guide

November Elections Are Almost Here - Be Informed

 

 

Educate yourself on multifamily issues that can be affected by your vote.

Usually at this time of year, companies are pushing for a strong EOY finish and setting budgets for next year. On these even years, it is hard to avoid the constant barrage of election campaign messages.

Representatives will be elected who will make decisions that significantly impact our industry.  Although how we participate in the election process is a personal decision, our challenge, as an industry, is to filter out the political noise and learn about the real issues we will face, and who may best represent us and our views.

Today's goal is not to guide you in a political direction, but to provide you with resources in order to educate yourself and your teams regarding the upcoming elections.

Our trade associations, the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC), have combined resources to produce “Issue Fact Sheets” on major legislative and regulatory topics affecting the multifamily industry.  The NAA/NMHC Joint Legislative Program Fact Sheets outline various federal and national issues we face and include their viewpoint on these issue.  Issues range from Building Codes and Tax Reform to Energy Policy and Bed Bugs.

On a local level, NAA also publishes State and Local Fact Sheets, containing background information and regulatory outlooks from the coming year. (Note: Access to the NAA local Facts Sheets may require membership.)

The November elections can impact our industry for many years to come, and with an educated viewpoint on the candidates and issues, we as industry leaders, can help our multifamily industry prosper through our actions on November 4th.  If you have any additional resources to share, please send a note and AUM will share it.

Email Us Here!

California Market Alert: Assembly Bill 2451 Regarding Submetering is Now Law

 

 

CA Market Alert: CA Bill 2451 Is Now Law

New law streamlines approval of submeters for use in the state.

California_Map

After numerous attempts over the last year to modify submetering rules in the state of California, AUM, along with many industry players and the office of Assembly Member Tom Daly of the CA 69th District, have successfully drafted California Assembly Bill 2451.  The bill was approved by Governor Brown, Chaptered by Secretary of State Debra Bowen, and is now law.  We are very excited about this successful effort in streamlining the approval process for water submeters as well as lowering the existing liability placed on those that supply, install and use submeters. The chaptered bill:

  • Allows submeters to be tested in one county and used in another
  • Allows approved submeters to be reserved for a period of time
  • Assures testing fees are paid to the county where tested
  • Clarifies that submeters are “placed in service” when they are installed
  • Determines the proper disposal and use of submeters that fail county testing

We are very excited with the cooperrative work between all parties, including the Division of Measurement Standards, and look forward to future positive legislative efforts.

 

Energy Commodity Procurement Outlook - October

 

 Energy_Outlook_Oct_1

Energy_Outlook_Oct_2

Storage Injections Grew; but May not Reach Historic Levels

Gas Storage levels continued to grow at strong levels.  But the injection season is coming to an end.  With only 4 weeks remaining, it will be a challenge to climb back to last year’s storage levels or the 5-year average storage levels.  In order to fill the caverns and reach the 3,400 Bcf level, we need to see weekly injection levels of over 82 Bcf for the remainder of October.  Record high production and continued mild weather contributed to the strong injections in September.

 Energy_Outlook_Oct_3

Weather Forecast : Above Average Temperatures for Most of the Country

Temperature Outlook

For the Lower 48 States, the three month forecast predicts above normal temperatures.  Only New Mexico and western Texas are predicted to see below average temps. In October, both coasts are expected to experience above normal temperatures, with only the upper Midwest to see below normal temperatures.

Weather for October does not appear to be a major factor in energy prices.  Based on weather predictions alone, energy prices should remain flat through October.  However, November is the beginning of winter and when the markets will begin reflect increased weather volatility.  While weather is predicted to be above normal in November and December, the markets will likely react sharply to weather changes; let’s not forget how quickly the market changed on last years’ December weather.

Don’t wait until November to lock in this winter’s natural gas prices.  Market adjustments to weather changes may be swift and sharp.  

 Energy_Outlook_Oct_4

EC-Equal Chance for A.N.B.      A- Above      N- Normal     B - Below

Courtesy: NOAA

Energy Prices

September Natural Gas Prices Up Only 14 Cents; the Same for October

September Natural Gas 12-month strip prices began at $3.823/MMBTU and ended at $3.957/MMBTU with a few ups and downs along the way.  October trading began at $4.003/MMBTU. Factors contributing to the bearish outlook are all-time high gas production, above normal storage injections and mild temperatures.  Optimism is dampened with the larger remaining storage deficit and all-time high exports to Mexico.  Overall these factors look to balance each other and analysts predict normal prices for October.

Energy_Outlook_Oct_6

As winter approaches, it brings the cold temps and also price volatility.  The EIA’s chart below looks at Implied Volatility (IV) vs. Actual Volatility.  Implied Volatility helps analysts calculate the probability of market movement.  In general, IV increases when the market is bearish and decreases when the market is bullish.  The common belief is that bearish markets are more risky than bullish markets.  The chart below is a reminder of last winter’s market volatility. As a reminder, natural gas prices rose 26% from November 2013 to March 2014.

Energy_Outlook_Oct_7

Bottom Line: Short-Term Natural Gas Prices Remain Flat - Let's Not Forget Last Winter

It’s October and winter is just a few weeks away.  The good news is the predicted above normal temperatures should keep gas prices stable in October.  The concerning news is that November is coming, along with it the normal colder weather, but also potential for having storage levels under the 5-year average. If we experience colder than expected temperatures in November, energy markets could start to take off. 

Per EIA, Henry Hub natural gas spot prices averaged $3.73/MMBTU in 2013, and are expected to average $4.46 in 2014 and $3.87 in 2015.

October is a great time to lock in this winter’s gas prices.  Waiting is the risky option.

 

 

About The Author

Dimitris Kapsis joined AUM in 2008, and is responsible for the creation and management of the Energy Solutions group. His leadership had allowed AUM to expand its offerings and become a leading national energy management services provider for the Multifamily industry. These Energy Management solutions are inclusive of energy management planning, facility utility auditing, energy commodity procurement, utility variance analysis, rate & tariff analysis, budgeting and benchmarking in addition to AUM’s traditional Invoice Processing, Resident Services, and Utility Submetering services.

In addition to his responsibilities at AUM, Dimitris is active in the Association of Energy Engineers (AEE) and the American Society of Heating, Refrigerating and Air-Conditioning (ASHRAE). He also holds several professional certifications, including Certified Energy Manager (CEM®) and Certified Energy Procurement Professional (CEP®). He is a frequent speaker on Energy Management in Multifamily including:

• Guest Lecturer at Georgia Tech’s School of Building Construction
National Apartment Association
NMHC Leadership Conference
• EPA Panel Speaker on Energy Star

Dimitris is an advisor to the EPA’s development of a Multifamily benchmarking standards, and a member of the Data Taxonomy Think Group lead by Fannie Mae, the EPA and funded by the MacArthur Foundation. He received his B.S., Urban Systems Engineering in 1993, and his M.S., Facilities Management in 1997 from George Mason University.

AUM - Technology Choice Award Winner for 2014

 

Multi-Housing News Taps American Utility Management as Technology Choice Award Winner for 2014

National multifamily publication award chosen by over 25,000 industry executives representing over 5,000 organizations.
 

Lombard, IL –(September 28, 2014) – Multi-Housing News (MHN), an industry-leading national publication for Multifamily, has awarded American Utility Management, Inc. (AUM) a 2014 MHN Technology Award for utility management.  The MHN Technology Awards, voted on by industry users, recognizes companies who provide flexible customization, competitive pricing, and the most innovative solutions, all backed by superior customer support.

“AUM is honored to receive this award from Multi-Housing News,” says Joe Stackhouse, AUM President and Chief Operating Officer.  “Since 1994, our sole focus has been to help Multifamily property owners maximize NOI through expert energy and utility management.  For them, transforming energy expense data into actionable information is the difference between profit and loss.  Our Performance Dashboards and Ad Hoc Reporting Tools on the AUM Advanced Analytics platform reduce millions of data points into simple visuals, allowing our clients to make critical decisions quickly for competitive advantage. We affect properties’ NOI every day in a very real way.”

 

Utilities are Installing Smart Meters; But Who Owns the Data?

 

 

Over the past few months, we’ve all been inundated with reports on the new Apple iPhone 6 release and all of the new features it has to offer.  It got me to think about all the data that travels through the air, across phone lines and over the internet; and about all the new devices that are being used to gather and send all the data.   The Internet of Everything (IoE) phenomenon, which is the next big wave of how people and things connect to the internet, is growing exponentially.  IoE applications (often Machine-2-Machine applications) include: smart meters, video surveillance, smart cars, package tracking chips, chipped pets and livestock, and digital health monitors.  Today, there are over 2.9 Billion M2M connections and they are projected to grow to 7.3B by 2018. 

But what about the business aspect of all these new devices and resulting data: 

1)    Who Owns the Data? 

2)    Who has Rights to transform the data into valued information?

In the utility world, these are hot topics.  Recently in Chicago, ComEd installed 425,000 smart meters as part of its $2.6B grid-modernization project; that number of smart meters is planned to grow to over 4 million meters.  The list of companies wanting access to the data is almost as long as the number of meters themselves, but no data is flowing.  No one is able to see the benefits of energy efficiency as a result of the new energy information gathered via the smart meters.  Why?  Because regulators are still determining who owns the data (the utility or the customer) and how data is to be released in order to comply with privacy laws.

The US Department of Energy (DOE) has established  the “Green Button” as the standard for smart meter data access by customers.  Green Button is a good start.  However, the local utility is the only one who presents the energy data to the customer and only in the format or manner that the utility chooses.  In order to enable the markets to develop products and services around smart meter data, rules must be established to enable easier access to the data for enterprising business as well as property managers like you.

At AUM, we are fortunate to gather all of the utility data from your invoices as a part of our invoice processing service.  On the AUM Advanced Analytics Platform, clients get instant access to their information via a myriad of on-line reports, a first-glance Performance Dashboard with data drill-down capabilities, and other self-serve Ad Hoc Reporting Tools.  

But the next generation of data coming from smart meters has yet to be made easily available to customers and energy solution providers.  AUM’s question to you is:  How should AUM advocate on your behalf to ensure the data is most accessible to you?  What is the best solution to gather your residents’ utility data?  Do you want to access your residents’ usage data in order to help them become more efficient (and enable your properties to become more energy efficient)?

 

Multifamily Market Alert - EPA Announces 1-100 ENERGY STAR Score for Multifamily

 

 

Multifamily Market Alert

EPA Announces 1-100 ENERGY STAR Score for Multifamily

Today, the Environmental Protection Agency (EPA)  announced the availability of its 1-100 ENERGY STAR score for Multifamily. For two years, EPA has been analyzing energy data received from the Fannie Mae Multifamily Survey and Data Taxonomy Project. Available through ENERGY STAR Portfolio Manager®, the score enables owners and managers to compare energy performance of their properties against similar properties nationwide.  It provides valuable information to help prioritize energy efficiency efforts and track improvements. 

AUM Chief Energy Officer Dimitris Kapsis was actively involved in the development of the benchmarks, and the score is an important development in the future of Multifamily energy management.  

As an ENERGY STAR Partner, AUM works on your behalf to ensure that both property characteristics data and energy usage data needed to deliver a score are correctly input into Portfolio Manager.  We will continue collaborating with EPA to make sure the new tool is an effective measure of your energy usage.

 

 

Why AUM?
Founded in 1994, AUM is celebrating its 20th anniversary of increasing Multifamily property NOI & RE value through use of its integrated Resident Billing & Energy/Utility Management tools. 

For a no-obligation NOI Analysis & Program Plan that demonstrates what AUM can do to help your bottom line, click below.

No-Obligation NOI Analysis

To learn more about our services click below

AUM Services Overview

 

Energy Commodity Procurement Outlook - September

 

 1

Natural Gas Storage

2

Storage Injections Grow, but Miss Market Expectations

US Natural Gas Storage levels continued to grow, but the markets expected more and as a result, natural gas prices bumped up a few cents per Bcf on the NYMEX.  The East and West natural gas regions both saw storage builds larger than their 5-year average (12 BCF and 6 BCF above 5-year average, respectively), while the Production Region experienced a 2 BCF drop below in storage injections. 

While storage levels are increasing, the average unit cost of the gas in storage is $4.38.MMBtu, 15% higher than this period last year.  Reasons for concern: only 9 weeks left in the injection season, lower than expected gas storage levels, the effects of recent warm weather, and higher priced cost of stored gas; these factors do not bode well for the price of this winter’s gas coming out of storage.

 3

Weather Forecast : Temperatures Less of a Factor

Temperature Outlook

As the summer comes to an end, weather is becoming less of a price factor over the shoulder months of October and November.  The end-of-August hot spell did have some impact on storage injections, however traders do not expect near-term warm temperatures to sway prices. 

The temperature outlook for September through November indicates above-normal temperatures in the West and almost the entire Eastern coastline.  Below average temperatures may be felt in the central area of the Great Plains.

Near term weather concerns are trending towards possible tropical storms and hurricanes, which could disrupt oil and gas rigs and production in the Gulf of Mexico.

 4

EC-Equal Chance for A.N.B.      A- Above      N- Normal     B - Below

Courtesy: NOAA

Energy Prices

Natural Gas Prices Continued to Move Up as August Ends

The warmer temperatures during the end of August and an underwhelming gas storage report caused natural gas prices to move up at most market locations.  NYMEX 12-month prices increased 1.7%, closing the month at 40.35¢/therm.  Likewise, the 12-month PJM electricity prices rose 1.3%.  Henry Hub gas prices rose 14¢/MMBtu in the last week of August.  September futures contracts rose from $3.823/MMBtu to $3.957/MMBtu, before the contract expired.  The October prompt month started trading up at $4.003/MMBtu.

Regional Pricing of Note: Northeast Prices Show Wide Fluctuations 

The major Northeast market areas saw prices trade with strong discounts to the Henry Hub since the spring. At Transcontinental Pipeline's Zone 6 (serving New York), prices began the last week of August at $2.37/MMBtu, fell to $1.86/MMBtu (the lowest level since December 1998), and ended the week up at $2.79/MMBtu. At the Algonquin Citygate (serving Boston), prices rose from $2.46/MMBtu to $4.23/MMBtu, and then fell to $2.92. 

The Midwest and West saw prices increase. Chicago, rose 8¢ to $4.01/MMBtu, and Northern California prices increased to $4.56/MMBtu.

Also hampering gas prices is the low number of active rigs (330), down 57 units from last year.  The chart below indicates gas spot price increases the last few years as the rig counts decline.  Fortunately, fracturing and horizontal drilling have provided significant volumes of gas to offset the lower rig counts.

5

Bottom Line: Get Ready for Winter Pricing

Labor Day has passed, summer is over and the end of gas injections season is nearing.  The good news is that gas production is up; thanks to fracturing and horizontal drilling.  But with less than two months of gas injections left, it will be difficult to get back to our 5-year average storage levels.  Prices will be challenged if another cold winter hits us.  Low storage levels, higher priced gas in storage and no increase in available pipeline capacity could result in the perfect storm for this winter’s prices.  This Fall’s pricing will be mainly driven by near-term weather forecasts (primarily tropical storms) and storage reports.

Now is a good time to start locking in your winter gas; at least a portion of it to mitigate potential winter price risk.

 

 

About The Author

Dimitris Kapsis joined AUM in 2008, and is responsible for the creation and management of the Energy Solutions group. His leadership had allowed AUM to expand its offerings and become a leading national energy management services provider for the Multifamily industry. These Energy Management solutions are inclusive of energy management planning, facility utility auditing, energy commodity procurement, utility variance analysis, rate & tariff analysis, budgeting and benchmarking in addition to AUM’s traditional Invoice Processing, Resident Services, and Utility Submetering services.

In addition to his responsibilities at AUM, Dimitris is active in the Association of Energy Engineers (AEE) and the American Society of Heating, Refrigerating and Air-Conditioning (ASHRAE). He also holds several professional certifications, including Certified Energy Manager (CEM®) and Certified Energy Procurement Professional (CEP®). He is a frequent speaker on Energy Management in Multifamily including:

• Guest Lecturer at Georgia Tech’s School of Building Construction
National Apartment Association
NMHC Leadership Conference
• EPA Panel Speaker on Energy Star

Dimitris is an advisor to the EPA’s development of a Multifamily benchmarking standards, and a member of the Data Taxonomy Think Group lead by Fannie Mae, the EPA and funded by the MacArthur Foundation. He received his B.S., Urban Systems Engineering in 1993, and his M.S., Facilities Management in 1997 from George Mason University.

 

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Founded in 1994,  AUM is celebrating its 20th anniversary of increasing Multifamily property NOI and RE value through use of its integrated Resident Billing and Energy/Utility Management tools.  For a no-obligation NOI Analysis and Program Plan that demonstrates what AUM can do to help your bottom line, click the button here.

No-Obligation NOI Analysis

 

 To learn more about our services simply click on this button.

AUM Services Overview

Market Alert Update: Current CA Legislative Session Comes to Close with No Vote on SB411

 

 

Market Alert Update: Current CA Legislative Session Comes to Close with No Vote on SB411

California_Map

We alerted you last week of CA SB411, the water conservation bill introduced by Senator Lois Wolk of the 3rd District.  AUM, along with other Multifamily industry advocates, worked with Senator Wolk to ensure that Multifamily property owner interests were protected as they related  to billing residents for water.

SB411 was passed late in the legislative session and was not read in the Rules Committee, so the bill will not be voted on this year.  Any future bill must be reintroduced and go through the entire legislative process.  AUM will remain diligent in protecting Multifamily owners’ rights as they relate to resident utility billing. 

 

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