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News & Insights

Top Energy Topics: with expert, Tony Barnhart

Tony, what are your thoughts on the market going from historic lows during the COVID-19 pandemic, to now the highest it’s been in almost 7 years?

TB: It honestly wasn’t a surprise.  We’ve been saying for a while now that prices can’t remain near historic lows forever or, in many cases, below the cost of producing a kWh or Dth.  However, I think what was surprising is how fast it went from historic lows to ~7-year highs.

How would you advise a customer at a time like this going into the winter months?

TB: It really depends on a customer’s risk profile and current supply contract expiration date.

  • If a customer is risk adverse with the desire of budget certainty and a near term supply contract expiration, consider at least a 24-month next term supply agreement in most electricity markets.  This will provide price certainty at a lower rate than a shorter-term agreement.
  • If a customer’s next term supply agreement doesn’t expire for another year or two, consider adding years to secure your supply rate for many years to come.  We’ve helped some customers buy out for 6-8 years.  Electricity markets are backwardated, meaning future years prices are less expensive than near term.
  • With natural gas prices at recent highs, consider locking in basis for several years out.  Typically, as natural gas prices increase, basis pricing can be fairly attractive.

Can you talk about the importance of businesses paying more attention to Energy Efficiency and Sustainability goals?

TB: Sure, the cheapest kWh of energy is the one you do not use.  For this reason, it’s important to look at all areas to reduce consumption – whether it be through conservation, retrofits, or upgrades.

As for Sustainability, it’s important to get ahead of what likely will be, if not already, future mandates from your customers.  EnerConnex is working with more and more of our customers on Sustainability reporting not only due to their customers requiring more from them but also increased investor scrutiny, think ESG.

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