On May 6, 2021, New England energy forwards began increasing after a long period of inactivity. The COVID-19 bubble had seemingly passed, and business was returning to normal. After 16 months of hardly any market movement, some volatility wasn’t exactly shocking.
Energy rates started going up, week after week, causing everyone to wonder when they’d plateau or begin to fall, especially after the summer of 2021 passed. After all, the Fall is the “best” time to buy, right? Instead of coming down, energy forwards surged for the next 16 months. Every day from May 6, 2021, to September 6, 2022, prices were higher than the previous day. As a result, utility rates hit all-time highs, some suppliers temporarily suspended pricing, and others pulled out of the New England market for good.
Energy managers were scrambling for ideas “how can they do this” was echoed in every conversation we had, but the reality is, there was no “they.” Rates were increasing because demand was growing, there were no solutions to combat our rising dependency on natural gas, Russia started a war, and the United States became the world’s largest exporter of Liquified Natural Gas.
Electricity and Natural Gas forwards trade well into the future, so they can be purchased well before they’re needed. We encourage our municipal clients to start the renewal process about 24 months ahead of the contract expiration, implementing your overall strategy in the process. Reviewing executable offers helps you plan for the future; it allows you to track price movement in real time and discuss the best path forward with everyone involved. With so many Massachusetts towns committed to reducing greenhouse gas emissions, the market increase made it almost impossible to consider purchasing additional green power if your agreement expired in 2022 unless you purchased early.
What can we learn from this? There is power in information and asking questions. To ensure our clients are well informed, Freedom Energy prepares a bid summary detailing the similarities and differences between offers and makes recommendations. There’s no charge or commitment to review these offers or use our services to monitor and report back.
Our team can help reduce surprises during the energy procurement process for municipalities.
Published: March 17, 2023