Plugging into Multifamily - The Official Blog of AUM

January Energy Outlook

Posted by Alison Hoss on Tue, Jan 13, 2015 @ 04:23 PM

Jan15_Intro

Natural Gas Storage

Mild December Weather Curbs Withdrawals -  Storage Levels Finally within 5-Year Average Range 

As of EIA’s December 26th Storage Report, storage levels were at 3,220 BCF; 232 BCF above the same period in 2013, yet still below the 5-Year average by 3%.  The current 3,220 BCF storage level marks the first time since November, 2013 in which total working gas is within the 5-year historic range (the gray band shown on the chart below). We started this withdrawal season at a 10% deficit below historic 5-year averages.  Due to our mild December, withdrawals have been small and have not bled reserves like last December and January.

Jan15_Storage_Table

Working Gas in Underground Storage Compared with the 5-Year Maximum and Minimum - Billion Cubic Feet

Jan15_Storage_Graph

 

Weather Forecast: Colder Temperatures for the South 

January has started out with frigid cold, but is expected to end mild throughout most of the US.  Only Texas and the Central States are predicted to experience below-normal temperatures.

The long-range forecast show below-normal temperatures for Texas through Virginia.  The West Coast will experience above normal temperatures.

Jan15_Temp_Outlook

 

Energy Prices

Natural Gas

December was a great month for energy prices. Warm temperatures dampened the heating demand for natural gas and record high gas production applied downward pressure to energy prices; causing natural gas prices to drop 6% and electricity prices dropped 1%. The last two weeks of December were significant with the NYMEX average 12-month price for natural gas closing down 12% and the PJM 12-month average price for peak power dropping 7%.

February natural gas contracts continued to fall to $2.882/MMBtu, despite the cold spell in early January reaching across most of the country.  This week’s cold temps are expected to end and a return to above-normal temperatures is expected.  Short-Term cold spells should be expected, but unlike last winter, they are not expected to last for extended periods.

 

Jan15_Natural_Gas_Prices

Electricity

As natural gas prices go, so follows electricity prices.  Most all electric markets have seen a corresponding dip in prices; however not as noteworthy.  Our biggest concern today on the electric front comes from significant increases on the utility standard/default service rates.  Large increases have been enacted in the Northeast and Midwest.

Bottom Line

Mild December Weather Offsets Low Storage Levels

This Holiday Season brought us three gifts: mild December temperatures, limited storage withdrawals, and record gas production levels throughout  the injection season. The combination of these events has offset lower-than-normal storage levels. As a result, natural gas prices fell to the lowest levels in 2 years, down 35% since November.  At a time when prices usually escalate ahead of the peak season for heating demand, the warmer-than-normal December and record production has limited storage withdrawals.

 

Tags: Energy cost, Energy procurement, Multifamily, Energy market, EnergyBlogs, energy benchmarking

AUM Energy Outlook - July 2013

Posted by Dimitris Kapsis on Mon, Jul 08, 2013 @ 11:52 AM

 

Natural Gas Storage

June 2013 was a month of normal to below average temperatures in the Northeast and Midwest and fairly wet.  For once weather forecasts came to fruition and natural gas pricing followed the expected related downturn.  On Thursday, June 27th the Energy Information Administration (EIA) reported a natural gas injection into storage of 95 Bcf, in line with analysts’ expectations.  As a result natural gas in storage is currently at 2.533 Tcf, 31 Bcf below the five-year average figure and 522 BCF below last year’s level.

Gas Injection July resized 600 

Natural gas storage is still lower than last year’s levels and the five-year average but the variances are consistently shrinking with every week’s storage report.  During June the natural gas storage buildup reached 392 Bcf compared to last year’s same period buildup of only 250 Bcf.  If the storage injections continue at the same pace we should see the natural gas market loosening up further.  As forecasted last month the first triple-digit storage injection of the season was made the week of June 3rd; ahead of the five-year average and last year’s same period injection.

July Storage resized 600

 

Temperature Outlook

July and August temperatures for the Northeast and Midwest are projected to stay within normal to slightly above normal ranges.  Lower air conditioning demand should help keep energy pricing down and allow for higher than average injections to boost natural gas storage figures.  Both regions experienced large increases in natural-gas electric generation last year.  Due to higher prices for natural gas this year compared to last year electric generators have shifted back to coal as their main fuel thus reducing demand in the electric generation sector.  The hurricane season is still a wild card with forecasts of above average activity; we still have not entered the peak hurricane season, which centers around August and September, so more news to follow in the near future.

July Temps resized 600

 Courtesy EarthSat

 

Natural Gas Production and Pricing

Our national dry natural gas production continues to exceed last year’s levels.  In addition the switch from coal electric generation to natural gas generation has slowed down dramatically, while the higher natural gas pricing compared to last year has allowed several coal plants to recover some of their lost generation from the earlier fuel switches.  If the mild temperatures continue in the heavy electric usage locations such as the Northeast and Midwest, we have the potential for even softer prices.

On Wednesday, June 26th the July 2013 natural gas contract settled at a price of $3.707 per MMBtu, a drop from the June settle and a break from the upward pricing curve of the last three months.  The NYMEX Natural Gas settle curve depicted below includes a polynomial trend line (red line) which shows a sustained upward pricing curve; we are hoping the latest pricing break will allow for a reversal by the end of the summer season.

 Gas Settle   July resized 600

 

Bottom Line   

Currently the 12-month average forward pricing curve for natural gas is at $3.785 per MMBTU, compared to last month’s $4.157 per MMBT.  In addition the five-month pricing curve for the upcoming heating season, November 2013 through March 2014, is at $3.85 per MMBTU.  Last week was the turning point for natural gas pricing with substantial drops; it appears that the market might start to bottom out while several buyers have started to take advantage of the current low pricing in order to cover their positions for the upcoming winter loads.  As stated last month, according to several energy executives polled earlier in May, natural gas pricing is expected to remain in the $3 to $4 per MMBTU range for the rest of the year. 

The fact remains that natural gas and electric prices continue to trade higher than a year ago but they are still close to the lowest levels of the last ten years set back in May of 2012.  The recent development of shale gas production has provided some protection against extreme pricing spikes usually accompanying the hurricane season, but a large region of our country, the Northeast, inclusive of the NYC area and New England, has remained very volatile due to high dependence on natural gas for electric generation.  A coastal storm such as Sandy could create major disruptions and substantial price spikes particularly for these markets.

We continue to believe that the risk of higher pricing for both natural gas and electric supplies greatly outweighs any pricing downturn opportunities.  Clients should consider covering some or all of their electric and natural gas exposure for the upcoming summer loads if they have not done so already. If all goes well with temperatures, natural gas injections and the hurricane season we could see a buying opportunity in the late September/early October timeframe.  At that point clients should consider longer positions in the market compared to shorter 12- or 18-month deals.  In several cases we are seeing better pricing moving out to 24- and even 36-month offerings due to the lower capacity charges.

 

About AUM

In 2012, we experienced unprecedented growth in our business due in large part to a relentless focus on increasing property values for our client property owners.  In 2012 alone, we:

  • Processed 700,000 energy and utility invoices worth $157 million with 99.7% data capture accuracy and 99.9925% on-time payment;
  • Collected over $6 million in vacant charges that would have gone uncharged to residents and paid by Property Owners;
  • Issued 4.5 million billing statements representing $931 million in recovered expenses
  • Increased property values by $125 million through reduction in energy expenses using on-site energy audits;
  • Managed 145 million kWh and 13 million therms through energy procurement in deregulated states.

AUM’s suite of services is designed to be a complete energy and utility management solution. Effective energy management ensures proper energy allocation (Resident Billing Services), energy accounting (Invoice Processing Services), and rate and usage management (Energy Management Services).

For more information on how AUM Clients are using AUM’s complete financial package for Energy and Utility expense management to save up to 25% on their energy expenses, just click on the button below.

  

Tags: Energy cost, Energy consumption, Conservation, Energy budgeting, Energy procurement, Energy rates, Utility rate schedules, Energy Information Administration, Multifamily, Energy market, EnergyBlogs

AUM Energy Outlook - June 2013

Posted by Dimitris Kapsis on Wed, Jun 05, 2013 @ 09:52 AM

Natural Gas Storage and Usage

It was not so long ago that we were mentioning snow in our forecasts but we can safely state now that spring weather has finally taken over and summer temperatures are just around the corner.  On Thursday, May 30th the Energy Information Administration (EIA) reported a natural gas injection into natural gas storage of 88 Bcf, in line with analysts’ expectations and above last year’s injection and the five-year average.  As a result natural gas in storage is currently at 2.141 Tcf, 88 Bcf below the five-year average figure and 664 Bcf below last year’s level.

Gas Injection June

Natural gas storage is still lower than last year’s levels and the five-year average but the variances are consistently shrinking with every week’s storage report.  During May the natural gas storage buildup reached 276 Bcf compared to last year’s same period buildup of only 168 Bcf.  If the storage injections continue at the same pace we should see the natural gas market loosening up.  It is expected that EIA will report the first triple-digit storage injection of the season the week of June 3rd; ahead of the five-year average and last year’s same period injection.

June_storage

 

Temperature Outlook

June temperatures for the Midwest and the Southeast are projected to be within normal ranges.  Both regions experienced large increases in natural-gas electric generation last year. Normal temperatures should help keep pricing down.  Overall as the weather began heating up over the last several weeks, natural gas usage for heating throughout the US decreased substantially but usage in the electric generation sector rose as leading generators continued to use up their existing natural gas stockpiles. Due to higher prices for natural gas it is expected that most of the generators will shift back to coal as their main fuel thus reducing demand in the electric generation sector.  This month we are including the temperature forecasts for June and July with the following disclaimer: “Review with caution, information can change without any notice.”  In addition hurricane experts have called for an above-average active hurricane season.

 June_Temps

Source:  MDA Earth Sat

Natural Gas Production and Pricing

Our national dry natural gas production continues to exceed last year’s levels.  In addition current price spikes for natural gas commodity have reduced the switch of coal electric generation to natural gas generation and possibly have allowed several coal plants to recover some of their lost generation from the earlier fuel switches.  We also had several idle nuclear plants come back on line over the last few weeks further reducing the demand for natural gas. 

On Thursday, May 30th the June 2013 natural gas contract settled at a price of $4.148 per MMBtu, almost identical to the May settle.  The NYMEX Natural Gas settle curve depicted below includes a polynomial trend line (red line) to show that we have entered a sustained upward pricing curve which we are hoping flattens out over the summer months.

June_Gas_Settle

 

Bottom Line

Currently the 12-month average forward pricing curve for natural gas is at $4.157 per MMBTU.  It appears we have finally entered the spring season and the upcoming summer season appears to be approaching with mild temperatures.  According to several energy executives polled earlier in May natural gas pricing is expected to remain in the $3 to $4 per MMBTU range for the rest of the year.  

The fact is that natural gas and electric prices continue to trade higher than a year ago but they are still close to the lowest levels of the last ten years reached in May, 2012.  The recent development of shale gas production has provided some protection against extreme pricing spikes usually accompanying the hurricane season but a large region of our country, the Northeast, inclusive of the NYC area and New England has remained very volatile due to high dependence on natural gas for electric generation.  Coastal storms such as Sandy can create major supply disruptions, causing substantial price spikes, particularly for these markets.

Clients should consider covering some or all of their electric and natural gas exposure for the upcoming summer loads if they have not done so already; if all goes well with temperatures, natural gas injections and the hurricane season we could see a buying opportunity in the late September early October time frame.  At that point clients should consider longer positions in the market compared to shorter 12- or 18-month deals.  In several cases we are seeing better pricing moving out to 24- and even 36-month offerings due to the lower capacity charges.

Tags: Energy cost, Energy consumption, Conservation, Energy budgeting, Energy procurement, Energy rates, Utility rate schedules, Energy Information Administration, Multifamily, Energy market, EnergyBlogs

AUM Energy Market Outlook - May 2013

Posted by Dimitris Kapsis on Mon, May 06, 2013 @ 11:29 AM

Natural Gas Storage and Usage

Weather has continued to be the center of attention for the energy markets. April continued on March’s path with well below- average temperatures with substantial snow in the upper Midwest and the Rockies. On Thursday, April 25th the Energy Information Administration (EIA) reported a natural gas injection into natural gas storage of only 30 Bcf, in line with analysts’ expectations but well below last year’s injection and the 5-year average. As a result natural gas in storage is currently at 1.734 Tcf, 96 Bcf below the 5-year average figure and 807 Bcf below last year’s level.

 

Gas_Injection-May

 

A prolonged winter has caused an unexpected reduction in natural gas storage levels. But weather forecasters are noting that the shoulder season is finally here. Over the next several weeks demand for energy should decrease substantially, and heating loads should slowly be replaced with cooling loads. For only the second time in nine weeks, energy prices fell this past week. We will get a short respite from sharp price increases, but we cannot conclude that this downward price trend will continue. With an onset delay of the storage injection season and two below-average injections since, we have officially crossed below the 5-year average storage trend; a level not experienced since fall of 2011.

May_Storage

 

Temperature Outlook

According to the weather “experts” we have entered the period referred to as shoulder season. The wild card for natural gas prices, and in turn electric prices, is the upcoming summer demand. If the shoulder season extends well into June for the majority of the country with mild temperatures, we could see storage levels re-building above the 5-year average trend, allowing for the perception of a surplus with downward price pressure. If the shoulder season is short with warm summer weather demand knocking on our door early, we could see immediate price response with even higher levels. I am not adding any weather forecast graphs this month because they tended to be a little inaccurate over the last three months. Weather forecast experts have recently switched their prediction for May to “normal temperatures” instead of prior predictions for “above-normal temperatures”.

 

Natural Gas Production and Pricing

There is some good news. Our national dry natural gas production is approximately 1.5% above last year’s levels. In addition, current price spikes for natural gas commodity have reduced the switch of coal electric generation to natural gas generation and possibly have allowed several coal plants to recover some of their lost generation from the earlier fuel switches. We will also see several idle nuclear plants coming back on line for the upcoming summer season, so the demand for natural gas will reduce further. All these factors, with a little help from Mother Nature in terms of normal temperatures, should allow the natural gas storage to replenish and reduce the fears and speculations of a tightening supply forecast.

On Friday, April 26th, the May 2013 natural gas contract settled at a price of $4.152 per MMBtu, the first time it broke the $4.00 psychological resistance since August 2011. In the NYMEX Natural Gas settle curve depicted below we added a polynomial trend line (red line) to show that we have entered a sustained upward pricing curve which we are hoping flattens out by the end of the shoulder season.

May_Gas_Settle


Bottom Line

Natural gas prices have inched upward for the last nine weeks, with the exception of a couple of minor dips. Currently the 12-month pricing curve for natural gas is at $4.324 per MMBTU. There is always hope for recovery, and it appears we have entered the shoulder season with mild spring temperatures, allowing the natural gas market a breather hopefully for the next couple of months.

The fact is that natural gas and electric prices are trading higher than a year ago, but they are still close to the lowest levels of the last ten years set back in May of 2012. The spring thaw might be the right time to secure natural gas and electric pricing contracts for the foreseeable future. Clients should be considering longer positions in the market compared to shorter 12- or 18-month deals. In several cases we are seeing better pricing moving out to 24- and even 36- month offerings due to the lower capacity charges, market dependent.

Tags: Energy cost, Energy consumption, Conservation, Energy budgeting, Energy procurement, Energy rates, Utility rate schedules, Energy Information Administration, Multifamily, Energy market, EnergyBlogs, Risk tolerance

AUM Energy Market Outlook - April 2013

Posted by Dimitris Kapsis on Fri, Apr 05, 2013 @ 10:46 AM

 

 

Since the AUM March Energy Outlook, the weather over much of the U. S.  has posed challenges for the natural gas market due to colder than expected temperatures and increased demand for heat.  On Thursday, March 28th the Energy Information Administration reported a natural gas withdrawal from natural gas storage of 95 Bcf, well above what analysts expected.  As a result natural gas in storage is currently at 1.781 Tcf, only 61 Bcf above the five-year average figure.  

storage bubble   April

 

Unusually Cold Temperatures Driving Natural Gas Demand

Below-normal temperatures throughout the Northeast and  Midwest over the last 30 days have created above-normal demand for natural gas resources.  Under normal circumstances, we would have entered a storage injection period, but experts expect additional withdrawals near-term. With this withdrawal trend in place, natural gas volume in storage will, for the first time since fall of 2011, cross the five-year average trend as depicted by the blue line below.  Prior predictions of natural gas storage volumes exceeding the five-year average were proven wrong, validating the large influence of weather fluctuations on market pricing.

April Storage

 

Temperature Outlook

After the extended cold spell gripping the heating load regions of the Continental US over several weeks, temperatures are forecasted  to remain fairly cold through the end of this week.  Current heating demand wil place price pressure on the daily cash market and front-month futures contracts.  Weather forecasters are predicting warmer temperatures next week, with the warming trend to continue through April and May.  There is, however,  a disclaimer on these weather forecasts because over the last couple of months expert temperature predictions have left us in the “cold”.

temperatureoutlook april

 

Natural Gas Production and Pricing

Current storage inventory is well below 2TCF and may be below the five- year average by the end of the withdrawal season. Additional withdrawals are expected near-term, delaying the injection season by almost a month.  Additionally, there may be a demand increase due to added natural gas-generated electricity and economic growth.  All these factors are currently working against market pricing.  However, increased shale natural gas production and a possible easing of natural gas usage for electric generation may alleviate updward  price pressure. 

On Tuesday, March 26th the April natural gas contract settled at a price of $3.976 per MMBtu, the highest settle since August of 2011.

Gas Settle   April resized 600

 

Bottom Line   

Natural gas prices have inched upward for five straight weeks.  Last week, the 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose by 1.6%, and since the beginning of March, natural gas prices have risen by 11% while peak power prices have risen by 6%. 

Weather is to be blamed for this spike. March 2013 was approximately 25% colder than expected for most areas east of Mississippi.  But, there is hope for recovery. This past week’s price spike was the smallest over the last four weeks, which could mean the rally may be ending with the beginning of spring temperatures.  Even with the unexpected high withdrawal posted last week,  the market dropped substantially last Thursday. 

Natural gas and electric prices are trading higher than a year ago, but they are still very near to the lowest levels of the last ten years.  The spring thaw may be the right time to secure natural gas and electric pricing contracts for the foreseeable future.

Tags: Energy cost, Energy management, Energy consumption, Conservation, Energy budgeting, Energy procurement, Energy rates, Utility rate schedules, Energy Information Administration, Multifamily, Energy market, EnergyBlogs, Risk tolerance

AUM response to the Better Buildings Initiative gets a nod from energy media

Posted by Michael Miller on Fri, Feb 25, 2011 @ 03:55 PM

Blogpic63

You might have read my post that explained why multifamily needs more than Obama's Better Buildings Initiative to get its energy consumption under control.

I broke down the challenges that American Utility Management and the multifamily industry are facing as we try to operate more sustainably and spend less on energy.

The post got some great feedback, and also some interest from the media. A number of publications ran the piece including USA Today, EnergyBlogs by Energy Central Network, CleanTechies, and Renewable Energy World. Thanks for the coverage! And watch for a follow up on this issue next week.

Tags: Energy management, Legal and Regulatory, EnergyBlogs, Better Buildings Initiative, President Obama, Sustainability