SobeysBags t1_j5rg6o0 wrote on January 25, 2023 at 1:10 AM

Reply to comment by safetysmitty3990 in Remind us again why CMP is doubling and worse our electric bills? by easy_peasy_woeisme

I really dont care about cmp.

So why didn't these issues you mention, double the cost of electricity 3,4,5,6 or 7 years ago, but rather did in the last 12 months? The only change I can see is that natural has increased in cost due to recent factors. Since natural gas has gone down in price the last couple of months, it would stand to reason that the cost wouldn't almost double but at least stay stagnant. Nevertheless, if they are locked in paying the 2022 natural gas screwed power rates, then we are just screwed until 2024. Unless there is some clause that allows rates to be renegotiated.

safetysmitty3990 t1_j5rinz0 wrote on January 25, 2023 at 1:29 AM

There are liquid natural gas terminals in New England that would normally be adding gas supply at mid-points in the pipelines. And the prices paid at those terminals are normally very high compared to pipeline gas, which they needed to be to attract loads here instead of other terminals around the world. Now with the war in Ukraine, LNG terminals in Europe are paying far higher rates than prices in New England, so ships are going there instead.

SobeysBags t1_j5rtp0m wrote on January 25, 2023 at 2:49 AM

So the microcosm of new England, Maine specifically, is paying higher prices for natural gas, despite the price going down everywhere else, even Europe. I'm not seeing any evidence for that no matter where I look. What are your sources or is this assumption? Nevertheless, my original question was are prices locked in even if natural gas dropped even more in terminals or pipelines?

safetysmitty3990 t1_j5rv5ix wrote on January 25, 2023 at 3:00 AM

The evidence is the higher prices lol. Default rates are usually bid out for a year at a time: https://www.maine.gov/mpuc/regulated-utilities/electricity/standard-offer-rates/cmp

My description of the market is glossing over quite a bit of nuance that I don't really care to actually get into. Source: I've worked as an energy consultant in New England for over a decade.

SobeysBags t1_j5tagbh wrote on January 25, 2023 at 12:29 PM

The price was high last year, the natural gas prices have fallen just this month or two. Considering they locked in those prices at the height of the natural gas price last year, it kind of sucks that those prices have been locked in, when natural gas will most likely fall even further. This will mean huge profits for energy providers using natural gas based energy to Maine. Bummer the negotiations didn't have a adjustment clause built in. Seems like an oversight.

Sources would be good, any energy consultant can still be a "trust me bro". Either way it's a moot point since the prices are locked in from natural gases high last year.

safetysmitty3990 t1_j5tc9tu wrote on January 25, 2023 at 12:47 PM

Here's an article I spent 5 seconds searching for on Google: https://www.naturalgasintel.com/haynesville-output-to-top-16-bcf-d-as-total-lower-48-production-continues-to-climb/

They talk about exactly the same phenomenon I am and even had a nice graph. I'm actually surprised you 'haven't been able to find any evidence' since it's all over search 'new england natural gas basis'.

SobeysBags t1_j5tmeoj wrote on January 25, 2023 at 2:11 PM

ok, I guess I am not being clear enough, I apologize if that is the case. I am not debating about 2022 or pervious gas prices, I know those are high. I am saying the price is dropping right now, as we speak, currently, in the present. However the price for the standard is locked in from 2021/2022. So as the price falls for natural gas across the board, right now, Mainers will be stuck with one of the highest electricity rates they have had until the standard offer is renegotiated for 2024 (unless natural gas should increase again in 2023 , who knows with world events). Sheesh.

safetysmitty3990 t1_j5ue6gb wrote on January 25, 2023 at 5:14 PM

I'm sorry for being dismissive. I understand your question and I haven't done a good job getting my point across. There are NYMEX natural gas futures contracts that are falling, but you also need the basis piece (the cost of moving the physical gas molecules through pipelines) to get a complete price. So delivered wholesale gas is gas futures + basis futures. Even when gas futures fall, basis futures have remained elevated. I've been trying to find a source but basis futures priced are not available for free (you'd need a Bloomberg Machine or ICE subscription). Here is an article that has a graph of pricing for the 23-24 winter season: https://www.nrg.com/insights/energy-education/purchasing-strategies-for-new-england-market-dynamics.html

Bottom line is when you see the headlines that gas prices are falling, it's not reflective of what the real delivered price is in New England.