2. Introduction ENERGY CONSULTING Switch Energy is an energy consulting firm that assists non-residential electric consumers in making informed energy purchasing decisions. Switch Energy has developed numerous channel partnerships with major Retail Energy Providers across the country offering all-inclusive energy contracts to serve a wide variety of business and government entities. Simplifying the energy markets.
3. Energy Consultant WHAT WE DO Switch Energy recognizes that every customer has different needs; therefore a customized Energy Cost Savings analysis is created on behalf of each client. WHY US The customers needs come first. We have years of energy experience and a proven track record for saving our clients money. Before deregulation, businesses had no choice and therefore no need to pay attention to the energy market. You simply paid the regulated rate just like everyone else. Over the past decade, deregulation has ushered in a new era of competition and consumer choice. You have the power to choose.
4. Electricity Deregulation The objective of deregulation is to offer energy customers greater choice, both among suppliers and services. Ideally that will result in increased market efficiency and dollar savings to the consumer. U.S. Department of Energy The reality is that savings do not come by default, You Must Choose! In a deregulated market the business must decide who to buy from, when to buy, what type of contract, how long to contract or whether they should consider a market based rate. With every option comes a certain level of risk, the decisions a business makes or fails to make is what drive the cost.
5. Energy Portion Open To Competition Deregulated Electricity Generator Regulated Delivery (Utility Co) Deregulation means the generation portion of electricity service is open to competition. During the deregulation process the local utility is forced to sell their generation capacity, what remains is a regulated delivery (utility) company that continues to deliver electricity and provides billing and customer service to the consumer.
8. Electricity Prices – Highly Volatile This chart shows the movement of electric prices on the wholesale market Electricity market is 10 times more volatile than the stock market Price is now low which makes it a great time to lock in prices long term
9. Factors That Affect The Price of Electricity Many factors affect the price of electricity and can introduce price risk to the customer Fuel price New Plant Construction Demand – Forecasted to grow by 30% to 40% Load & seasonal variation Local climate On the fuels used to generate electricity Environmental Issues Natural disasters – Hurricanes that disrupt fuel delivery Political instability Congestion Charges – not enough delivery infrastructure Transmission and RTO service charges Regulation Speculation Inflation Unpredicted plant outages of base load plants Supply and demand issues cause monthly and even daily price fluctuations Demand is usually highest: In the afternoon and early evening, known as “on peak” hours During the summer and winter months when electricity is used for heating and cooling
10. Electricity Generation – Fuel Types Most people think that the price of oil affects the price of electricity. Not true, this chart shows that 70.2% of electricity is generated from Coal and Natural Gas. The U.S competes for these fuels globally.
11. Energy Outlook 2008 - Fuel Price Forecasts World Oil Price Natural Gas Wellhead Price nominal dollars per barrel nominal dollars per thousand cubic feet Coal Minemouth Price Average Electricity Price nominal dollars per ton nominal cents per kWh Annual Energy Outlook 2008
15. Deregulated Energy – Complex Market The multitude of options combined with dramatic price fluctuations makes the deregulated market infinitely more complex. Switch Energy helps businesses buy energy at 15% to 50% off peak rates in deregulated markets with a simple and objective process based on proven strategies that eliminates uncertainty and volatility risk for the consumer. Switch Energy connects businesses with the right supplierand the right contractat the lowest possible rate. These and many other energy providers
27. Energy Provider Contract Options The Plan You Should Choose Depends On The Amount of Risk That You Are Willing To Take Month To Month Variable Rate With Pass Thru Risk Very High Price varies Based on monthly average market Hourly Priced Variable Rate With Pass Thru Risk Extremely High Price varies hourly based on market and can easily double or triple Hybrid Fixed Energy With Pass Thru Risk High Fixed energy but pass-thru charges can add 5 cents to the energy price Fixed All In No Pass Thru Risk None Eliminates all risk, this rate is constant and includes all pass-thru charges, no bandwidth Most businesses lack the time, expertise, and tools to track the energy market and make good purchasing decisions. Businesses today rely on experts when it comes to financial, insurance real estate and other complex transactions.
28. Cost Saving Scenarios: Retail Seafood House Paying $3,000 Monthly Annual Usage: 241,900 kWh Old Rate: $0.14555 New All Inclusive Rate: $0.1199 3 Year Savings: $52,657 Automotive Repair and Body Shop Paying $7,500 Monthly Annual Usage: 597,200 kWh Old Rate: $0.145000 New All Inclusive Rate: $0.1175 3 Year Savings: $128,667 Retail Furniture Store – 7 Locations Paying $9837 Monthly Annual Usage: 945,200 kWh Old Rate: $0.12490 New All Inclusive Rate: $0.125 3 Year Savings: $81,257, First Year Savings $5100 Large Manufacturing Facility Paying $85,000 Monthly Annual Usage: 7,846,153 kWh Old Rate: $0.130100 New All Inclusive Rate $0.117400 3 Year Savings: $1,215,484 Medical Center Paying $25,000 Monthly Annual Usage: 1,849,650 kWh Old Rate: $0.1622 New All Inclusive Rate $0.0911 3 Year Savings: $527,759
The most important aspect of electric power markets this summer is that wholesale prices are likelyto be quite a bit higher than last year. Forward prices from the InterContinental Exchange are 50 to90 % higher than last summer’s prices. They are higher almost everywhere, in both RTO and non-RTO regions. The degree of increase depends on how often natural gas is the marginal fuel beingburned, not on whether a region is part of an RTO. Thus, the largest increases appear in theNortheast where gas is almost always on the margin. The lowest appear in the Midwest, where coalis more often on the margin.These prices are important, but I need to give you two cautions in using them. First, forward pricesare not predictions of the future. They are the price that willing buyers are paying – right now – towilling sellers for deliveries this summer. That may or may not be where the prices end up. In anycase, they are already affecting eventual costs – those who hedge their positions with forwardtransactions are locking in this price already as part of their summer portfolio.Second, there is no direct relationship between wholesale and retail electric prices. The effect ofhigher wholesale prices in short-term markets on retail prices varies based on the reliance on shorttermpurchases.