After a dramatic 40 percent decline in natural gas prices, energy experts and end-users alike are asking, “Is now is the right time to lock in a natural gas fixed-rate contract?” According to Nick Papamichael, Chief Procurement Officer at GREENCROWN Energy, the handwriting is on the wall and the answer is yes.

“Everybody wants to buy at the bottom, but bottom-hunting can be an elusive and costly target,” said Papamichael, a sought-after speaker on energy cost-reduction and turnkey conservation measures. “Instead of going bottom-hunting, people should view today’s market as an outstanding opportunity to buy low and sell high.”

To make his case, he recommended considering the “Polar Vortex” of 2014, when natural gas prices eclipsed $6/MMBtus during a far colder winter than predicted. Over the last 12 months, he points out, natural gas prices have steadily and rapidly declined, creating very real opportunities for end-users to finally consider fixing their variable rate — or to extend their current fixed natural gas agreement.

“For example, right now current March 2015 NYMEX natural gas futures are down $0.05 at $2.61/MMBtu,” he stated. “As prices have continued to grind lower, it appears increasingly likely that winter will end with a large surplus of gas in storage. Cold weather forecasts in 2015 have mostly gone unfulfilled, resulting in a predominately bearish market. This means now is the right time to lock in gas!

According to Papamichael — whose advisory work at GREENCROWN Energy focuses on helping clients lower gas and electricity outlay by locking in the most favorable
long-term contracts — today’s natural gas market represents more upside than downside risk in cementing a fixed gas contract. He believes that both types of gas users — flat-load and head-load users — should be locking in favorable natural gas prices right now.
“Flat-load users of gas — such as restaurants, diners and manufacturers who use gas throughout the year — should take advantage of the 44 percent drop in natural gas prices from a year ago to recognize immediate savings,” Papamichael said. “Heat-load users — such as high-rise residential and office properties, along with retail clients who only use gas for heat — will recognize the bulk of their savings in the heat-using months next winter.”

Bottom line? Both flat-load and heat-load clients should be locking in rates right now. The market is low and now is the time to buy. Could rates continue to drop? They could, but the risk of staying on a utility rate while experiencing rising gas prices is far greater than taking the sure thing and locking in at a guaranteed low rate right now.

A final thought: Papamichael added that although everybody wants to buy at the lowest point of the market, waiting too long could prove very costly. “For instance, just one month of a price spike increase could wipe out an entire year of savings, as we saw in February 2014. Rates are low right now, and the advice we’re giving our clients is to take advantage of the 44 percent drop in rates at this time.”

About GREENCROWN Energy
GREENCROWN Energy is a nationally known, industry-diverse leader in turnkey energy conservation projects and advisory services for electric and gas procurement. Serving clients both locally and nationally, GREENCROWN provides concept-to-completion project management — including audit and survey, specification, financial analysis, labor and installation (union/nonunion), and rebate administration.

GREENCROWN also provides financing and Power Purchase Agreements. The company is brand-agnostic (meaning it is not affiliated with any specific manufacturers), so it is always in the best position to offer the finest, most cost-effective products for any application.

GREENCROWN Energy is also known for its lighting retrofits and replacements, demand response programs, HVAC and refrigeration ECMs, water conservation, unit replacement, VFDs, motors, emerging technology, BMS/EMS systems, and renewable (solar, thermal and geothermal) services.

By Paul Errigo Feb 16, 2015 no responses

Call us! 1-877-308-2727