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More Regulatory Changes in Mass. Add Up to Higher Electric Bills in 2015

2015cork - shutterstock_216319537200x133In addition to the return of the ISO-NE Winter Reliability Program for 2014/2015 that we recently told you about, there are three additional regulatory changes in Massachusetts that could impact your third-party supply contract – especially if you signed a contract prior to Sept 1, 2014.

As you know, the Commonwealth of MA prides itself on being one of the “greenest” states in the nation. Unfortunately, this comes at a cost that is being directly passed along to you.

  • Solar Renewable Energy Credits I – aka SREC I

On August 28, 2014, DOER announced the SREC I Solar Carve Out percentage for 2015. It will be 2.1442%, up from 0.9841% in 2014. This increase will be offset slightly by a decrease in the Alternative Compliance Payment (ACP) price for SREC I for 2015, which will be $496/MWh, down from the 2014 ACP of $523. The net effect of these changes is an estimated increase of $0.006/kWh to your contracted rate for 2015.

  • Solar Renewable Energy Credits II – aka SREC-II

The Mass.Gov website also indicates that DOER has established the Compliance Obligations for the SREC-II program for 2015. The compliance obligation for 2015 is 0.3288% versus 0.084% for 2014.

The ACP price for SREC-IIs have been set at $375 for 2015 (same price as for 2014).  The change to the SREC II percentage is estimated to increase your contracted rate for 2015 by $0.00125/kWh. If you signed a supplier contract prior to April 25, 2014, you are exempt from this charge during the course of your contract.

The total impact for both the SREC-I and SREC-II changes announced by DOER will be approximately $0.00625/kWh as of Jan 2015.

  • Purchase of Receivables (POR) Program:

The Massachusetts Department of Public Utilities has implemented a Purchase of Receivables (POR) program – DPU Docket 10-53.

This program impacts all customers that have their third-party supply charges billed on their electric utility invoices (i.e. NGrid, NStar, WMECO).

The program was implemented pursuant to Section 60 of the Green Communities Act, which stated “electric distribution companies (“EDCs”) are required to purchase the accounts receivables of competitive suppliers that have chosen the complete billing method and that serve customers in the EDCs’ service territories. The Purchase of Receivables (“POR”) program is intended to mitigate the risk that competitive suppliers bear regarding nonpayment by their customers, thus avoiding the need for suppliers to undertake costly credit screening and selective enrollment processes, particularly for their small commercial and residential customers. A POR program mitigates such risk by establishing a discount rate at which the electric distribution companies purchase the receivables of competitive suppliers. The expectation is that implementation of a POR program will reduce the barriers that competitive suppliers face in seeking entry into the competitive market, thereby increasing the number of market participants and enhancing retail competition.”

The potential cost to you for the POR program being implemented on Jan 1, 2015 will be approximately $0.0007/kWh if you are on a medium-sized commercial rate class, or it could be as low as $0.0003/kWh if you are on a large commercial/industrial rate class. If you have a mix of rate classes across numerous accounts, you will receive a load-weighted price.

Finally, as a quick refresher about the Winter Reliability program:

  • ISO-NE 2014/2015 Winter Reliability Charges (Winter Reliability (WR):

On Sept 9, 2014, the Federal Energy Regulatory Commission (FERC) approved the ISO-NE’s plan to implement a Winter Reliability Program for the winter of 2014-2015 across all six New England states (FERC Docket ER14-2407-000). Last year’s Winter Reliability Program cost rate payers ~$75 million; this year’s program is expected to cost $25 million more.

This last issue applies to all customers in New England. The program will be in place for the 3 winter months of December, January and February.  Early estimates put the cost of the program at approximately $100 million. This will add about $0.0027/kWh to three of your monthly invoices.

Last year, some suppliers charged their customers for this program during the winter months based on their estimates of the program’s expected cost. Others charged their customers in the spring and summer once the program’s actual cost was known. This billing phenomenon could occur again in 2015.

To Summarize:

The total impact of these regulatory changes is significant and could amount to an increase in your 2015 electricity costs of up to 10% over and above your contracted rate.  Not all of the regulatory changes will apply to you depending upon 1) when you signed your current supply contract and 2) the billing option you chose to implement with your third party supplier.

World Energy will continue to monitor changes in the market and keep you updated.  As always, we are available to help answer any questions you have.

World Energy Solutions Supports 26th RGGI CO2 Allowance Auction

$94 Million Generated for Strategic Energy and Consumer Programs

 Worcester, MA – December 10, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy technology and services firm, today announced it successfully supported  the 26th quarterly auction of carbon dioxide (CO2) allowances administered by Regional Greenhouse Gas Initiative, Inc. (RGGI, Inc.) on December 3, 2014.

According to RGGI, Inc., all 18,198,685 CO2 allowances offered for sale were sold at the auction at a clearing price of $5.21. The auction generated more than $94 million for reinvestment by the RGGI states in a variety of consumer-benefit initiatives, including energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement programs. Cumulative proceeds from all RGGI CO2 allowance auctions currently total $1.9 billion.

In a previously released statement, Kelly Speakes-Backman, Commissioner of the Maryland Public Service Commission and Chair of the RGGI, Inc. Board of Directors, said: “After 26 successful auctions, the RGGI states have demonstrated that it is possible to cost-effectively achieve pollution reduction goals while maintaining grid reliability and affordability for consumers. As our second control period draws to a close, the RGGI states continue to deliver cleaner air and economic benefits for our region.”

RGGI Auction 26 At a Glance

More details of the auction results can be found in the RGGI press release dated December 5, 2014 and at www.rggi.org. The RGGI auctions are administered by RGGI, Inc. and run on an online platform provided by World Energy Solutions.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the Regional Greenhouse Gas Initiative (RGGI), the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions, Inc.
(508) 459-8156
dmees@worldenergy.com

Source: World Energy Solutions, Inc.

ISO New England’s 2014/2015 Winter Reliability Program

snow covered thermostatIt’s back … No, we don’t mean the cold weather; we are talking about the ISO New England Winter Reliability Program.

On September 9, 2014, the Federal Energy Regulatory Commission (FERC), approved ISO New England’s plan to implement a Winter Reliability Program for the winter of 2014/2015 across all six New England states (FERC Docket ER14-2407-000). Last year’s Winter Reliability Program cost rate payers ~$75 million; this year’s program is expected to cost $25 million more.

Here’s what’s cooking.

When the program was implemented for the winter of 2013/2014, it was envisioned to be a one time, one winter program. But then it worked, and worked well. Last year during the Polar Vortex it incentivized generators to have alternative fuels available to run during peak hours, something ISO-NE wants to see again this winter.

Essentially, the Winter Reliability Program is coming back again this year because the New England region is still facing many of the same issues as last winter:

  • New England Natural Gas Pipeline Constraints
    There are significant constraints on the major pipelines that bring natural gas to New England. (Natural gas generation units make up 60% of the electricity generation fleet in New England). Given that most of the natural gas in New England is used for heating purposes, the winter cold puts a large strain on the existing natural gas pipelines.
  • Generating-Unit Closures
    The oil-fired generators at Salem Harbor retired in the middle of 2014 – removing 567 MW of generation from the grid. The owners of Vermont Yankee plan to close the 620 MW nuclear unit at the end of 2014. These closures create an even greater reliance on natural gas generating units in an area that is already natural-gas constrained in the winter.
  • Cold Weather Forecasted
    AccuWeather is predicting the return of cold weather in late December thru February. While it is not expected to be as cold as last winter, it is predicted to be colder than the winter of 2012/2013. Cold weather stresses the already constrained natural gas infrastructure, so incentivizing dual-fuel generators to move to oil can definitely help the region – the original intent behind the Winter Reliability Program.

What does this mean for you?

The 2014/2015 Winter Reliability Program will be in place for the three winter months of December, January and February. Early estimates put the cost at approximately $100 million (about $25 million more than the previous winter’s program because of some additional new components). This will add ~$0.0027/kWh to your monthly invoices for this period.

Suppliers will handle this increase as a regulatory change (unless it was specifically identified in your supplier contract as being included in the costs), and you should expect to receive notice from your supplier by mid-to-late November.

One added wrinkle. Last year, some suppliers charged their customers for this program during the winter months based on their estimates of the program’s expected cost. Others charged their customers in the spring and summer once the program’s actual cost was known. This billing phenomenon could occur again in 2015.

World Energy Solutions Announces Q3 Financial Results

Company Achieves Double-Digit Revenue Growth and Record Adjusted EBITDA

Worcester, MA – November 10, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy technology and services firm, today announced financial results for the three and nine months ended September 30, 2014.

Financial Highlights (All figures are in US dollars; comparisons of performance are made between Q3 2014 results and Q3 2013 results, unless otherwise noted.)

Revenue and Backlog

  • Quarterly revenue grew 13% to $9.9 million
    • Energy procurement revenue for the quarter grew 6%
    • Energy efficiency services revenue rose 49%
  • Revenue for the nine-month period increased 14% to $28.8 million
  • Annualized backlog stood at $23.9 million
  • Total backlog declined 4% to $44.2 million

Operating Results

  • Adjusted EBITDA* climbed to a record $1.4 million, up from $0.8 million
  • Net loss decreased to ($0.1) million, or ($0.01) per share, from ($0.6) million, or ($0.05) per share
  • Non-GAAP adjusted net income was $0.3 million, or $0.02 per share, which excludes $0.4 million in merger-related costs
  • Gross margins in the quarter fell slightly to 73% from 74%, reflecting the increased contribution of energy efficiency services revenue to total revenue
    • Energy procurement gross margins increased to 88% from 84%
    • Energy efficiency services gross margins decreased to 21% from 24%
  • Free cash flow for the quarter was $0.7 million

Liquidity and Balance Sheet

  • Cash and cash equivalents were $2.8 million at quarter end, a 60% increase from December 31, 2013
  • The Company commenced principal payments against its long-term debt

“This is clearly an exciting time for World Energy as evidenced by our strong quarterly performance and the recently announced agreement with EnerNOC,” said Phil Adams, CEO of World Energy Solutions. “Our Q3 results underscore the strength of our business model, which reliably generates profit and cash. Not only did we post another quarter of double-digit organic revenue growth, highlighted by the second best revenue quarter in our history, but we also achieved record adjusted EBITDA.

“Against this backdrop, we have attracted the attention of EnerNOC, which entered into an agreement to acquire World Energy last week. This move further validates our reputation as a technology leader in the energy management space. Our software-based auction platform continues to demonstrate significant value to participants in the retail energy sector and is poised to deliver significant synergies and cost savings to customers as part of EnerNOC’s energy intelligence software platform.”

Financial Review

Q3 2014

Revenue for the three months ended September 30, 2014 increased 13% to $9.9 million as revenue from both segments increased compared to the same period last year. Energy procurement revenue rose 6%, reflecting increased transaction activity from our auction, mid-market and wholesale customers as well as an increase in revenue recognized from previously deferred items. Energy efficiency services grew 49% as our rebuilt Massachusetts sales team continued to deliver an increase in the number of projects and average project size completed during the third quarter of 2014.

Gross margins decreased 1% to 73%, reflecting the increased contribution of energy efficiency services revenue to total revenue. Energy procurement gross margins increased to 88%, from 84%, reflecting a decrease in payroll due to our continued integration, automation, and reorganization efforts to improve processes and drive scalability. Energy efficiency services gross margins decreased to 21%, from 24% in the same period last year, due to the completion of one low-margin project completed during the quarter. Operating expenses as a percentage of sales decreased to 72%, from 76% in the same period last year, primarily resulting from the growth in revenue. Operating expenses increased primarily due to $0.4 million of costs incurred  related to our recently announced proposed merger with EnerNOC. Our operating margin improved to 1% as compared to (2%) in the same period last year, and adjusted EBITDA* margin was 14% compared to 10% in the prior year quarter. Non-GAAP adjusted net income was $0.3 million, or $0.02 per share, for the three months ended September 30, 2014 compared to a net loss of ($0.6) million, or ($0.05) per share in 2013.

At September 30, 2014, we had cash and cash equivalents of $2.8 million compared to $1.7 million at December 31, 2013 and $2.3 million at June 30, 2014. The increase in cash and cash equivalents during the quarter was primarily due  to free cash flow of $0.7 million for the quarter, which was partially offset by principal payments against our long-term bank debt. Free cash flow decreased from the same period last year as improved net income, adjusted for non-cash items, was offset by increases in accounts receivable and capitalized software costs, and a decrease in deferred revenue. The Company continues to maintain a $2.5 million line-of-credit with Commerce Bank and has not borrowed against this facility.

Year-to-Date 2014

Revenue for the nine months ended September 30, 2014 rose 14% over the same period last year to $28.8 million as revenue from both segments increased over the same period last year. Energy procurement increased 9%, reflecting increased transaction activity from our auction and mid-market customers, as well as increased revenue recognized from previously deferred items. These increases were partially offset by a decrease in gas transaction activity as increased commodity prices during the first quarter delayed contracting decisions by listers. Energy efficiency services increased 41% as our rebuilt Massachusetts sales team continued to deliver increased revenue in the NSTAR territory in Massachusetts during 2014. Gross margins were 75% for the nine months ended September 30, 2014 compared to 74% for the same period last year, reflecting an increase in both segments. Energy procurement gross margins increased to 87%, from 83%, primarily resulting from a decrease in payroll resulting from our continued integration, automation, and reorganization efforts to improve processes and drive scalability. Energy efficiency services gross margins increased to 20%, from 18% in the same period last year, due to improved contribution margins on projects completed during the first nine-months of 2014. Operating expenses as a percentage of sales decreased to 75%, from 82% in the same period last year, as the growth in revenue exceeded the increase in costs. The increase in operating expenses was primarily due to increased legal and consulting costs related to costs associated with our proposed merger with EnerNOC and the shareholder action in the first quarter of 2014. Overall, the Company’s operating margin improved to 1%, and adjusted EBITDA* margin was 12% as compared to 4% for the same period last year.

Note: Backlog relates to contracts in force on a given date representing transactions between bidders and listers on our platform related to commodity brokerage assuming listers consume energy at their historical usage levels or deliver credits at expected levels. Total backlog represents the commission that the Company would derive over the remaining life of those contracts. Annualized backlog represents the commission that the Company would derive from those contracts within the 12 months following the date on which the backlog is calculated. Total and annualized backlog at September 30, 2014 included commodity backlog of $43.3 million and $23.0 million, respectively. In addition, total and annualized backlog include contracted management fees between World Energy and energy consumers for energy management and auction administration services of $0.9 million that are expected to be received over the following 12-month period. These management fees can be terminated within 30 days per the terms of the contracts.

Conference Call & Webcast

World Energy will hold a conference call today, November 10, 2014, at 5:00 p.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 1 (800) 774-6070 (domestic) or 1 (630) 691-2753 (international) and enter passcode 8871616#. A replay will be available two hours after the completion of the call, and for three months following the call, by dialing 1 (888) 843-7419 for domestic participants or 1 (630) 652-3042 for international participants, and entering passcode 8871616# when prompted.

Participants may also access a live webcast of the conference call through the investor relations section of World Energy’s website, www.worldenergy.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 30 days.for three months following the call, by dialing 1 (888) 843-7419 for domestic participants or 1 (630) 652-3042 for international participants, and entering passcode 8871616# when prompted.

* Non-GAAP Financial Measures

World Energy provides all information required in accordance with GAAP and also provides certain “non-GAAP financial measures.” A non-GAAP financial measure refers to a numerical financial measure that is included in (or excluded from) the most directly comparable financial measure calculated and presented in accordance with GAAP in the Company’s financial statements. World Energy provides Non-GAAP net income (loss), adjusted EBITDA and free cash flow as additional information relating to our operating results. These non-GAAP measures exclude expenses related to the proposed merger of the Company with EnerNOC, depreciation related to our fixed assets, amortization expense related to acquisition-related assets and other assets, interest expense on bank borrowings, notes payable to sellers and contingent consideration, interest income on invested funds, and income taxes.

Management believes it is useful to exclude expenses related to the proposed merger, depreciation, amortization, net interest and income tax expense as these are essentially fixed amounts that cannot be influenced by management in the short term. Management defines free cash flow as net cash provided by operating activities less capital expenditures. Management defines capital expenditures as purchases of property and equipment, which includes capitalization of internal-use software development costs.

Management uses these non-GAAP measures for internal reporting and bank reporting purposes. World Energy provides these non-GAAP financial measures in addition to GAAP financial results, because management believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts in helping them to better understand the Company’s operating results and underlying operational trends. They also provide a consistent basis for comparison across accounting periods.

These non-GAAP financial measures are not prepared in accordance with GAAP. These measures may differ from the GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare the Company’s performance to that of other companies. There are significant limitations associated with the use of non-GAAP financial measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net loss prepared in accordance with GAAP.

Whenever World Energy reports non-GAAP financial measures, a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure will be made available. Investors are encouraged to review these reconciliations to ensure they have a thorough understanding of the reported non-GAAP financial measures and their most directly comparable GAAP financial measures. Reconciliation of GAAP net loss to non-GAAP adjusted net income (loss), adjusted EBITDA and Free cash Flow is shown below:

GAAP Net Loss

Reconciliation of Free Cash Flow

Notice to Investors

The tender offer described herein has not yet been commenced. The description contained in this press release is neither an offer to purchase nor a solicitation of an offer to sell securities of the Company. At the time the tender offer is commenced, EnerNOC and its wholly owned subsidiary intend to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer, and the Company intends to file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. Investors and stockholders of the Company are strongly advised to read the Tender Offer Statement on Schedule TO, including the offer to purchase, form of letter of transmittal and other documents related to the tender offer, and the Solicitation/Recommendation Statement on Schedule 14D-9 that will be filed by the Company, and other relevant materials when they become available, because these materials contain important information regarding the tender offer. Stockholders of the Company will be able to obtain a free copy of these documents (when they become available) and other documents filed by the Company or EnerNOC with the SEC at the website maintained by the SEC at www.sec.gov. In addition, the Schedule TO and related exhibits, including the offer to purchase, forms of letters of transmittal, and other related tender offer documents may be obtained (when available) for free by contacting the Company at 100 Front Street, Worcester, MA 01608.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the Regional Greenhouse Gas Initiative (RGGI), the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: whether the acquisition will be consummated; whether the Company will obtain a superior proposal; the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Jim Parslow
World Energy Solutions, Inc.
(508) 459-8100
jparslow@worldenergy.com

or

Dan Mees
World Energy Solutions, Inc.
(508) 459-8156
dmees@worldenergy.com

or

In Canada:
Craig Armitage
The Equicom Group
(416) 815-0700 x278
carmitage@equicomgroup.com

Summary of Condensed Consolidated Statements of Operations

Summary of Condensed Consolidated Balance Sheet

Source: World Energy Solutions, Inc.

New Jersey Energy Market Update: November

As the last “shoulder month” of the year, one of the months between the high cooling demands of the summer and high heating demands of the winter, November in New Jersey is historically one of the least volatile in terms of energy prices and therefore one of the most desirable times to contract. That is the case again this year, but there’s more urgency behind contracting now than in prior years.

In 2011 and 2012, New Jersey experienced very warm winters that kept energy prices low through January, February, and even March. Back then, the season that worried customers most about electricity rates was the summer. That all changed with last year’s record cold winter, the Polar Vortex, and FERC’s waiving of the $1,000/MWH price cap, each of which contributed to the ensuing price spikes. Every business that had any part of its load on index got burned, and the memories of that experience have not been forgotten.

To that end, we have seen a lot of deal activity in New Jersey over the last few weeks and are seeing our scheduled pricing events filling up through mid-November, with many customers looking to lock in favorable pricing for 2015, and even 2016, contract starts. Both large and small customers have been benefiting, with larger businesses gaining budget certainty and smaller customers beating the fixed utility rate through our events.

One outlier in the state: another NITS increase is set to impact rates for PSEG customers as of January 1, 2015. We’re seeing that increase contribute to pricing in PSEG coming in ~20% higher than other parts of the state.

Despite November’s relative calm, a recent forecast predicting a bout of cold winter weather drove prices up 3 mills ($0.003/kWh) in one week. Before all thoughts turn towards turkey, Santa, and possible cold weather, we believe it is opportunistic to transact now.

Pennsylvania Energy Market Update: November

November is always an interesting month in the Pennsylvania energy markets, as we are still in a traditional “shoulder month” (between the high cooling demands of summer and high heating demands of winter), which typically helps with prices, while we also start looking winter, and its threat of higher prices, dead in the eye.

This has been borne out over the last week as energy markets have jumped with the onset of cold weather in the state and jitters over the elections, though the overall Accuweather forecast for winter 2014-15 is better than last year’s.

So what besides the weather should you be on the lookout for? In our experience, the PA energy markets have been marked by relatively attractive commodity prices and strong liquidity – i.e. lots of suppliers, which makes for good competition for your business. While these attributes haven’t fundamentally changed, they are being shaped, even strained, by one unique dynamic here – contract timing. Because the PA electricity markets initially opened in January each year, we are seeing an abundance of customer contracts all coming up for renewal at the same time – now! With lots of January contract starts on our plates, the usual supplier liquidity we find for our customer pricing events may be in some danger. Borrowing an adage from real estate, the glut of contracts coming up for January starts has created a bit of a “supplier’s market.”

Does this mean you are bound to pay a hefty price as you race to get into a new contract? No, but if you have waited until now to procure energy for early in the new year, you may not get as many suppliers bidding for your business as you might like, and that can mean paying more for energy.

A couple of tips. We have found that we are getting better supplier participation in our events when we can give suppliers more advance notice. While we typically aim for at least 5-days-notice, we are gaining more liquidity when we can offer 10. And while we pride ourselves on our “open auctions,” which reliably drive down your rates, we find that in a crowded market like this one, using sealed bid events can attract suppliers that can’t make every open auction. This is to say that experience has taught us there is more than one way of attracting suppliers to bid on your business, and we like to use each of these approaches to ensure you get a great result.

What else? We’ve seen an uptick in electricity prices in Eastern PA but have had good success helping customers there “blend and extend” their contracts to mitigate the effects of the increase. Put another way, this approach takes your lower, current contract rate and blends it with the higher future rate to give you a more palatable rate that doesn’t break your budget or disrupt your business.

As I mentioned at the beginning of this piece, November is by definition a shoulder month, but it can lose its benevolence quickly depending on the weather, and this year it already has!