The third-largest budget item for many U.S. companies is energy, which falls just behind labor and material costs, according to ecova.com. The cost of energy for the U.S. commercial and industrial sectors was more than $202 billion from 2009 to 2011.

As one of the largest expenditures, it is important for employers to find the right combination of energy products by using the best energy supplier for their business needs. And for many, the best energy strategy may involve using petroleum products, bundled with other energy needs.

Petroleum accounts for 3.5 to 4 percent of the total primary energy consumption for commercial business, according to the U.S. Department of Energy. In addition, in 2010, the average price for petroleum — which includes distillate fuel, LPG, kerosene, motor gasoline and residual fuel — was lower than electricity.

“When searching for a energy supplier for petroleum, employers should look for a company with an all-encompassing portfolio of energy offerings, proving reliable, readily available and cost-competitive distillate supply at various supply terminals,” says Paul Rippy, senior marketer for petroleum products at PPL EnergyPlus.

Smart Business spoke with Rippy about which energy suppliers offer petroleum products, how to choose the right energy supplier and the current petroleum short-term market outlook.

Do all energy suppliers offer petroleum products?

No. While there are many energy suppliers that offer various products and services to help you with your energy supply needs, not all suppliers offer a comprehensive choice of energy supply options to help every facet of your business. If your business operates facilities that require different types of energy, it is important to align your business with an energy supplier that can meet all of your needs, whether that is using electricity, natural gas, petroleum products or all three.

When you are looking for a supplier that can be a one-stop shop for energy needs — including electricity, natural gas, petroleum products, renewable energy, demand response and mechanical services — you want to look for an energy supplier that can provide all of these products on a consistent basis. Not all suppliers offer petroleum products consistently or in all the areas where your facilities are located.

What are the advantages of bundling petroleum products with other energy supply products?

Certainly, when you find an energy supplier that is able to bundle various energy products and services to meet your business’s needs, you benefit from the ease and convenience of a one-stop-shop type of relationship. With a single energy supplier capable of meeting all your energy needs you, as an employer, can focus more directly on your other business aspects.

In addition, you may have facilities that are in various locations and have different energy needs. Selecting a supplier that knows how your business works and has committed to understanding your unique energy supply needs is the start of a business relationship that enables your company to have the most advantageous products and services for its energy needs.

What should employers look for when shopping for a petroleum supplier?

Employers should strongly consider the petroleum supplier’s professionalism, experience and ability to provide a diverse, reliable and readily available array of energy products. For example, companies such as PPL EnergyPlus maintain strategically located and limited available terminal capacity space to store products, allowing easy access to their rack customer base. You also want to select a supplier with a strong financial background, knowledge of petroleum and energy markets, and a strong commitment to customer service. And, of course, you want a supplier that can navigate the volatility of the petroleum market and provide your business with competitive prices.

What’s the short-term prospect for petroleum product prices?

As of the middle of May, U.S. gasoline prices were at an average of $3.754, decreasing throughout the beginning of May, according to the U.S. Energy Information Administration. The average in the Mid-Atlantic region was $3.764.

Based on experience and knowledge of the petroleum products market, we believes that distillate product prices will bottom out over the summer months before rising unsteadily into the winter. Gasoline prices will continue to trend downward through the summer into the winter months before trending upward next spring.

This is based on current market and economic data. We don’t have a crystal ball to have certain knowledge of the volatile petroleum market, but we follow the markets closely every day and use that knowledge to benefit customers.

However, the situation always remains in flux; certain events could occur tomorrow that would significantly change the outlook on short-term future petroleum product market prices.

PPL EnergyPlus offers unbranded diesel fuel, gasoline, heating oil and kerosene to electric generation facilities, distributors and large commercial and industrial, and federal, state and local government customers, not only in Pennsylvania but also throughout the Mid-Atlantic region. The Petroleum Products Division continues its strong, well-established supply relationships with refiners, commodity brokers and wholesalers.

Paul Rippy is senior marketer for petroleum products at PPL EnergyPlus. Reach him at (610) 774-5630 or MPRippy@pplweb.com.

Insights Energy is brought to you by PPL EnergyPlus

Published in Philadelphia

As electricity prices continue to drop, is now the time for businesses to evaluate electricity prices offered by suppliers?

Yes. With the overabundance of natural gas supply from Marcellus Shale driving electricity prices lower, there has never been a more advantageous time for businesses to evaluate the prices, products and services energy suppliers are offering. Energy suppliers are competitively offering some of the best pricing options in response to the current market trends. However, although businesses are seeing some of the lowest prices for electricity, the trends are cyclical and prices may very well trend upward once again, says Robert T. Homa, P.E., CEP, regional sales manager at PPL EnergyPlus.

“That is why assessing current prices from suppliers and researching what products suppliers can offer is in a business’s best interest to help it take advantage of the opportunities that exist in the market today,” says Homa. “To keep your business as a customer, a supplier should be well versed in market trends and should be providing you updates on energy prices and industry related news affecting the energy market and should be offering your business the tools to understand and apply these fluctuations in price to your benefit.”

Smart Business spoke with Homa about what to look for in an energy supplier.

Should businesses be looking to lock in electricity prices now?

Absolutely. We haven’t seen wholesale electricity prices and the natural gas market trending at levels this low in several years, which is good news for businesses. It’s a good market when you have so many choices and the ability to compare and contrast them. Keep in mind, though, that while now is a great time to shop for the some of the best prices, the market is volatile and electricity prices are cyclical, which means they will trend upward at some point. That’s why there has never been a better time to evaluate your energy supply needs and consider locking in your supply price to take advantage of low electricity prices.

What else should businesses look for in a supplier beyond price?

Certainly, price is a driving factor to help a business meet its bottom line. However, a solid energy supplier can offer much more beyond price to help your business in the long term. PPL EnergyPlus, for example, offers a consultative approach, helping customers understand the market and navigate fluctuating market trends with prices and demand.

Your energy supplier should constantly review your business needs in tandem with market trends to be sure the products and services you’re purchasing are giving you results. Your supplier should create a relationship with your company that goes beyond the sale. Your energy supplier can help you take advantage of pricing trends and other products and services to help your business achieve its energy purchasing objectives for the long term. Your supplier should know what peak times are crucial to your business’s energy usage and be able to deliver customized solutions and strategic options to help you benefit overall.

Another strategy is to purchase a product that allows you to dollar-cost average electricity. You can purchase a three-year contract that locks in 100 percent of your power needs in year one, 66 percent in year two and 33 percent in year three. The next year, you can lock in the remaining 34 percent for the second year, buy an additional 33 percent for year three and extend the contract to buy 33 percent for the fourth year. This allows you to dollar-cost average your purchases but still gives you time to find the soft spots in the market.

Do suppliers offer the same types of products and services?

No, and some vary greatly. PPL EnergyPlus, for example, offers a core set of structured products. Our products offer varying degrees of flexibility and stability, with budget certainty and the opportunity to take advantage of the market. We have the ability to tailor these products to specifically align with your business’s direct needs.

An energy supplier that can customize their product line to adjust to your business’ unique energy usage needs is crucial. Your energy supplier should understand that not every business operates in the same manner or has the same energy usage needs, so why should the products you choose be regimented? A comprehensive energy supplier will also offer your business services supporting your business objectives such as demand response, renewable energy services, mechanical services and other types of advanced electricity supply products and services. Finding a supplier that offers a full array of services allows your business to benefit from a comprehensive energy supply solution. Your energy supplier should know your business well enough to provide guidance as to the right type of products, services, terms and other supply solutions that would be the most beneficial to your business.

What services are available for businesses to be greener and more energy efficient?

Many suppliers offer a comprehensive program to help businesses support their green initiatives by minimizing their carbon footprint and investing in a greener future. We offer a green power program through our Renewable Energy Program for businesses. The program provides a financial foundation for the development of additional renewable energy projects, reducing the amount of energy in the electricity grid generated by traditional fossil fuels. PPL EnergyPlus offers businesses the opportunity to participate in this program and to purchase Renewable Energy Credits, which we then retire from the energy marketplace. An energy supplier that offers a renewable or green program can help you evaluate your environmental footprint and advise on the type of renewable energy supply that allows your business to best meet its corporate commitment toward greener initiatives.

PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus, LLC is not the same company as PPL Electric Utilities Corporation, the electric utility. The prices of PPL EnergyPlus, LLC are not regulated by the Pennsylvania Public Utility Commission, and you do not have to buy electricity or other products from PPL EnergyPlus, LLC in order to receive the same quality regulated services from PPL Electric Utilities Corporation.

Robert T. Homa, P.E., CEP, regional sales manager at PPL EnergyPlus. Reach him at (610) 774-4573 or RTHoma@pplweb.com.

Insights Energy is brought to you by PPL EnergyPlus

Published in Pittsburgh

As electricity prices continue to drop, is now the time for businesses to evaluate electricity prices offered by suppliers?

Yes. With the overabundance of natural gas supply from Marcellus Shale driving electricity prices lower, there has never been a more advantageous time for businesses to evaluate the prices, products and services energy suppliers are offering. Energy suppliers are competitively offering some of the best pricing options in response to the current market trends. However, although businesses are seeing some of the lowest prices for electricity, the trends are cyclical and prices may very well trend upward once again, says Andrew Bakey, P.E., CEP, regional sales manager at PPL EnergyPlus.

“That is why assessing current prices from suppliers and researching what products suppliers can offer is in a business’s best interest to help it take advantage of the opportunities that exist in the market today,” says Bakey. “To keep your business as a customer, a supplier should be well versed in market trends and should be providing you updates on energy prices and industry related news affecting the energy market and should be offering your business the tools to understand and apply these fluctuations in price to your benefit.”

Smart Business spoke with Bakey about what to look for in an energy supplier.

Should businesses be looking to lock in electricity prices now?

Absolutely. We haven’t seen wholesale electricity prices and the natural gas market trending at levels this low in several years, which is good news for businesses. It’s a good market when you have so many choices and the ability to compare and contrast them. Keep in mind, though, that while now is a great time to shop for the some of the best prices, the market is volatile and electricity prices are cyclical, which means they will trend upward at some point. That’s why there has never been a better time to evaluate your energy supply needs and consider locking in your supply price to take advantage of low electricity prices.

What else should businesses look for in a supplier beyond price?

Certainly, price is a driving factor to help a business meet its bottom line. However, a solid energy supplier can offer much more beyond price to help your business in the long term. PPL EnergyPlus, for example, offers a consultative approach, helping customers understand the market and navigate fluctuating market trends with prices and demand.

Your energy supplier should constantly review your business needs in tandem with market trends to be sure the products and services you’re purchasing are giving you results. Your supplier should create a relationship with your company that goes beyond the sale. Your energy supplier can help you take advantage of pricing trends and other products and services to help your business achieve its energy purchasing objectives for the long term. Your supplier should know what peak times are crucial to your business’s energy usage and be able to deliver customized solutions and strategic options to help you benefit overall.

Another strategy is to purchase a product that allows you to dollar-cost average electricity. You can purchase a three-year contract that locks in 100 percent of your power needs in year one, 66 percent in year two and 33 percent in year three. The next year, you can lock in the remaining 34 percent for the second year, buy an additional 33 percent for year three and extend the contract to buy 33 percent for the fourth year. This allows you to dollar-cost average your purchases but still gives you time to find the soft spots in the market.

Do suppliers offer the same types of products and services?

No, and some vary greatly. PPL EnergyPlus, for example, offers a core set of structured products. Our products offer varying degrees of flexibility and stability, with budget certainty and the opportunity to take advantage of the market. We have the ability to tailor these products to specifically align with your business’s direct needs.

An energy supplier that can customize their product line to adjust to your business’ unique energy usage needs is crucial. Your energy supplier should understand that not every business operates in the same manner or has the same energy usage needs, so why should the products you choose be regimented? A comprehensive energy supplier will also offer your business services supporting your business objectives such as demand response, renewable energy services, mechanical services and other types of advanced electricity supply products and services. Finding a supplier that offers a full array of services allows your business to benefit from a comprehensive energy supply solution. Your energy supplier should know your business well enough to provide guidance as to the right type of products, services, terms and other supply solutions that would be the most beneficial to your business.

What services are available for businesses to be greener and more energy efficient?

Many suppliers offer a comprehensive program to help businesses support their green initiatives by minimizing their carbon footprint and investing in a greener future. We offer a green power program through our Renewable Energy Program for businesses. The program provides a financial foundation for the development of additional renewable energy projects, reducing the amount of energy in the electricity grid generated by traditional fossil fuels. PPL EnergyPlus offers businesses the opportunity to participate in this program and to purchase Renewable Energy Credits, which we then retire from the energy marketplace. An energy supplier that offers a renewable or green program can help you evaluate your environmental footprint and advise on the type of renewable energy supply that allows your business to best meet its corporate commitment toward greener initiatives.

PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus, LLC is not the same company as PPL Electric Utilities Corporation, the electric utility. The prices of PPL EnergyPlus, LLC are not regulated by the Pennsylvania Public Utility Commission, and you do not have to buy electricity or other products from PPL EnergyPlus, LLC in order to receive the same quality regulated services from PPL Electric Utilities Corporation.

Andrew Bakey, P.E., CEP, is regional sales manager at PPL EnergyPlus. Reach him at (610) 774-5227 or ABakey@pplweb.com.

Insights Energy is brought to you by PPL EnergyPlus

Published in Philadelphia
Saturday, 31 March 2012 21:01

How to manage your energy costs

If your business hasn’t recently evaluated its contract with your natural gas and electricity suppliers, now is the time to do so.

With the introduction of Marcellus Shale, coupled with natural gas from other sources, prices have dropped significantly, making it the ideal time to partner with an energy supplier that can help you navigate the market, says Terry Crupi, director of Natural Gas Marketing and Trading at PPL EnergyPlus.

“Falling wholesale prices are proving a boon to businesses, and if you haven’t recently evaluated your contracts, you may be paying more than you need to,” says Crupi.

Smart Business spoke with Crupi about how partnering with an energy supplier can benefit your business.

What has been the impact of Marcellus Shale gas development on natural gas prices?

The introduction of Marcellus Shale, and natural gas from other sources, has contributed to a significant drop in natural gas prices to levels we haven’t seen in more than a decade. The increase in available natural gas supply, coupled with the economic recession, has caused prices to tumble by about $2.50 cents per million BTUs over the last 12 months.

These low prices have saved Pennsylvania businesses about $1.4 billion in natural gas costs, and created an opportunity for businesses to lock in their natural gas price and to evaluate switching to natural gas to power systems and processes.

The drop in natural gas prices has also affected wholesale electricity prices because power plants that run on natural gas often set the price for electricity in the competitive wholesale market. In the last 12 months wholesale market prices for electricity have decreased by about $1 billion in savings in electricity costs for Pennsylvania consumers.

As we see an increase in the development of Marcellus Shale, other benefits will become evident, such as the creation of jobs in existing businesses and enticing new businesses to the state. Marcellus Shale gas provides many long-term benefits to consumers and taxpayers beyond just the direct price impact for this important energy resource.

How do natural gas prices affect electricity prices?

Natural gas is a leading indicator for electricity prices, so as the increase in supply of natural gas decreases its price, the prices for electricity are driven downward as well. We are also seeing that, as natural gas becomes more available with the development of Marcellus Shale, power plants that run on natural gas are becoming more competitive on a cost basis with power plants that run on coal.

Historically, coal has been the lowest-cost source of electricity generated with fossil fuels. As the cost equation changes, and coal-fired power plants are faced with managing the uncertainty of new natural gas supply and new environmental regulations, natural gas will continue to gain prominence as a power generation fuel.

In addition, plentiful amounts of natural gas — or any commodity — generally result in lower prices, which provides lower costs (savings) and helps businesses and consumers meet or improve their bottom line. Low energy prices present opportunities for businesses to expand, increase production, or, at a minimum, switch fuels. In fact, many large industrial customers are now considering or converting to natural gas supply.

In some cases, co-generation with natural gas-fired generators may help reduce costs and improve reliability. These are options smart businesses will want to explore in the current energy situation.

What is the long-term view of natural gas prices? Will they stay low?

Our experience in the natural gas market and our analysis of the trends lead us to believe that low, more stable natural gas prices will be with us for a few years. It’s important to keep in mind, however, that natural gas prices are cyclical. At some point, due to increased demand or reduced supply, natural gas prices will trend upward once again. This is why it’s so important for smart businesses to evaluate their energy usage and monitor energy markets.

Many customers do this on their own while others receive assistance from an energy partner or supplier that has the knowledge and experience to understand when conditions are changing and can advise businesses on the best ways to manage their energy costs — or more important, advise them on an energy strategy.

How can businesses take advantage of the current low energy prices?

Partnering with an energy supplier that understands the nature of energy prices, external effects from government regulations and industry trends such as Marcellus Shale will help your business take advantage of current market conditions while assisting you in navigating the market in the future. Businesses now should be evaluating their current contract with their natural gas and electricity suppliers and asking how they can benefit from today’s low energy prices.

There are also ways to optimize a business’s energy usage to gain even more savings. The retail energy market provides other products and services that help you more efficiently and effectively procure and use energy.

The key is to proactively find an energy partner that you are confident will help you successfully navigate the energy landscape.

Terry Crupi is director of Natural Gas Marketing and Trading for PPL EnergyPlus, a competitive gas supplier serving industrial and commercial customers in Pennsylvania, New Jersey, Maryland and Delaware. Reach him for wholesale and retail inquiries at                   PPLRetailGas@pplweb.com or (610) 774-2310.

Insights Energy is brought to you by PPL EnergyPlus

Published in Philadelphia

While many of the costs of doing business continue to rise, the price of wholesale electricity has dropped significantly.

And that offers businesses the opportunity to partner with an energy supplier to identify ways to reduce their electricity and fuel costs, says L. Gene Alessandrini, senior vice president of marketing at PPL EnergyPlus.

“Decreasing prices make now an ideal time to review their options and develop an energy procurement strategy with their supplier,” says Alessandrini.

Smart Business spoke with Alessandrini about how to develop energy procurement strategies to take advantage of long-term pricing trends and evaluate what a competitive energy supplier can offer your company to help capture savings

Why are wholesale energy prices so low right now?

We have seen a significant drop in wholesale electricity prices since the start of the current economic recession. Prices on the market today are significantly lower than they were even six months ago.

Part of the reason for this is the reduction in electricity usage caused by the slowdown in the general economy. Another major factor is the significant decline in natural gas prices. Wholesale electricity prices have a strong correlation to the price of natural gas because of the way prices are determined in the regional power market.

With the increasing availability of shale gas in the market from the Marcellus Shale formation and other shale gas deposits, natural gas prices are dropping even lower. And as long as natural gas prices remain low, electricity prices should remain low as well.

Where do you see energy prices headed in 2012?

As more and more natural gas from the Marcellus Shale and other shale gas comes into the market, we expect natural gas prices to remain depressed, which also will keep wholesale electricity prices low.

Another factor that could affect prices in 2012 is the recent federal appeals court decision that halted implementation of the Environmental Protection Agency’s sweeping Cross State Air Pollution Rule, which was supposed to take effect Jan. 1. The federal court decision delaying the rule also put downward pressure on electricity prices.

But smart businesses will not lose sight of the fact that prices in any market are cyclical, and wholesale electricity prices will rise at some point. Continued uncertainty regarding a wide range of environmental regulations proposed by EPA affects wholesale electricity prices, and as regulations become more stringent in the future, they could put upward pressure on power prices in the long term.

For the near term, however, lower electricity prices are a great financial benefit for businesses. The current depressed prices provide opportunities for businesses to reduce their electricity and fuel costs, which makes 2012 an ideal time to develop energy procurement strategies and evaluate what competitive energy suppliers can offer your business.

With electricity prices as low as they are currently, is it advantageous for businesses to lock in prices now or wait until they go even lower?

It’s a great time for businesses that are doing their homework about electricity and fuel supply. With wholesale electricity prices at such low levels, businesses can take advantage of low prices by reviewing their options and developing energy procurement strategies.

PPL EnergyPlus recommends businesses re-evaluate electricity and fuel supply options with competitive suppliers no differently than how they would assess their portfolio and weigh the opportunities.

Staying ahead of inevitable pricing fluctuations and seeking out future pricing for your organization can save you in the long run. When you are informed about market trends and how relatable factors such as Marcellus Shale and other shale gases, for instance, could affect your energy prices, you can take a proactive approach to those future pricing trends.

Although we expect prices to continue to fall in the near term, the objective should not be to try to find the lowest price but to develop a strategy to take advantage of long-term pricing trends and capture savings to allow your business to succeed.

What long-term effect will Marcellus Shale natural gas supply have on prices that businesses pay for natural gas and electricity service?

As more and more shale gas comes to market, the increased availability of natural gas keeps prices low. This not only affects natural gas supply prices but also electricity prices. Natural gas is increasingly used as a fuel to generate electricity, and based on how the market determines electricity prices, there is a strong correlation between natural gas prices and wholesale electricity prices.

Right now, natural gas and wholesale electricity prices are extremely low. Because there’s an abundance of natural gas in the Marcellus Shale region that could be brought to the market, it’s possible that natural gas prices will remain this low for an extended period of time, which would also keep electricity prices low. Natural gas development from Marcellus Shale and other shale gas play could also have a significant impact on businesses.

The smart businesses will be looking for opportunities to actively manage their electricity costs and seizing them.

L. Gene Alessandrini is senior vice president of marketing at PPL EnergyPlus. Reach him at lgalessandini@pplweb.com or (610) 774-4483.

Published in Philadelphia

Energy is one the biggest costs for businesses, and failing to find the right plan to meet the needs of your business can prove to be a costly mistake.

But partnering with a comprehensive energy supplier can help your company find ways to reduce its costs and manage fluctuations in usage, says Annette Durnack, director of retail energy at PPL EnergyPlus.

“Too often, businesses just use the supplier that they always have, and pay the bill each month as it comes,” says Durnack. “But energy is too big an expense for businesses for management not to take the time to find the right partner for their energy needs to help them manage their costs. Taking the time to analyze your needs and then finding the right plan to meet them can provide a huge advantage to your company.”

Smart Business spoke with Durnack about how to save money on your energy supply and find a plan that is right for your business’s needs.

How can businesses be sure they are reaping the most savings on their energy         supply?

Pennsylvania’s competitive electricity market, and the ability to choose your electric generation supplier, create opportunity for businesses to save money. For many companies, electricity is a major cost of doing business, and reducing that cost can help make you both more competitive and more profitable.

The first step is to seek a solid, comprehensive energy supplier that can provide electricity to your business at a competitive price, consult with you about products and services that may meet your specific energy needs, and help you navigate market trends with expertise to leverage fluctuations in the market prices to your advantage. Understanding how market fluctuations affect what you pay for electricity, based on the products and services you’ve selected from an energy supplier, can have a significant impact on your budget.

Products and services are available from suppliers in the competitive market that, when aligned with your specific energy consumption needs, can not only save you money but also can produce revenue from your electricity use.

What types of products should businesses consider to help save electricity and money?

Each business uses electricity differently, so it stands to reason that each business has a particular product or service that is best suited for its needs. For example, some businesses use more energy at night than they do during the day. Others may use large amounts of electricity for short periods of time. For instance, ski resorts have different energy needs than industrials, and office buildings have different energy needs than bakeries.

Because all businesses use energy differently and have different needs, PPL EnergyPlus offers a core set of products and pricing structures, as well as customizable products, to help businesses achieve the most energy savings with changing market trends. One specific type of service that some energy suppliers offer is demand response, a service in which your business earns revenue based on your ability to curtail electricity use during certain times of the year when energy demand on the grid may be at its highest point. Demand response programs can turn the electricity that powers your business into a marketable commodity and a potential revenue stream.

What are the potential savings benefits of participating in a demand response service?

PPL EnergyPlus’s partnership with one of the leading demand response service providers can bring you the benefits of a demand response program. There are a variety of programs available, some of which allow for voluntary curtailment and others in which a business is required to curtail energy when called upon by the transmission grid operator. The financial benefits of each program vary based on the amount of load that a business can curtail, whether participation is voluntary or required, and the price of energy during the curtailment period. One program in particular requires customers to commit to reducing electricity use by as little as 100 kilowatts, which some businesses can accomplish by making minimal changes in their operations.

The key to finding the program that best suits your business’s needs is to talk to an energy supplier that understands the market and can explain the programs to you and help you determine which program best meets your needs.

What other services can businesses couple with demand response for greater savings?

Many energy suppliers will offer compatible services to help your business. PPL EnergyPlus offers several products and services that are carefully tailored to match your unique energy usage needs. Its dedicated team offers customers a personalized approach to understanding which energy supply products and services, coupled with demand response service from an industry expert, offer the most benefits to help your company’s bottom line.

Annette Durnack is director of retail energy at PPL EnergyPlus. Reach her at (610) 774-3182 or AMDurnack@pplweb.com.

Published in Philadelphia
Wednesday, 30 November 2011 20:01

How energy policy could affect your bottom line

The state’s open energy market continues to provide businesses significant savings.

Retail choice has been a tremendous benefit to Pennsylvania businesses, and new products and services continuously provide greater benefit. However, businesses — with assistance from their energy supplier — need to monitor legislative and regulatory policies to ensure they maintain the benefits of energy savings and the promising developments in today’s energy markets.

“This is another critical time in our industry and for Pennsylvania businesses,” says Bob Barkanic, senior director of energy policy at PPL EnergyPlus. “Executives need to be monitoring pending policies and develop energy supply strategies to lock in these low energy prices.”

Smart Business spoke with Barkanic about new federal and state regulations and new energy policy opportunities.

What will happen to electricity prices as a result of new federal and state environmental regulations?

Protecting the environment is important to all of us. The challenge is balancing this objective with today’s current economic climate.

Our goal is to educate policymakers and customers to ensure the best decision possible is being made. For our customers, our objective is to explain the potential impacts and risks so they can procure their energy correctly. The proposed environmental regulations are expected to boost energy generation (production) costs, and these higher costs will eventually be passed along to businesses and households.

Environmental policies that potentially will have an impact on electricity prices are:

  • The Cross-State Air Pollution Rule. This EPA regulation takes effect Jan. 1, 2012, and requires 27 states, including Pennsylvania, to improve air quality by reducing power-plant emissions that contribute to ozone and particle pollution in other states.
  • Section 316(b) of the Clean Water Act. The EPA is developing regulations that require that the location, design, construction and capacity of cooling water intake structures at power plants reflect the best technology available for minimizing adverse environmental impact.
  • The regulation of coal combustion residuals. The EPA has proposed federal regulations to govern the disposal of coal ash and other wastes generated by electric utilities and independent power producers, which would potentially make handling more expensive.

These environmental policies are important to Pennsylvania and to our nation. The goal is to implement them correctly — with transparency and with an effective market structure — and to inform businesses of how to prepare for the changes that will result from the policies.

What effect will renewable energy requirements have on electricity prices?

Renewable energy, like environmental policy, is an important component of an effective long-term energy policy. PPL Corp. believes a balanced approach toward energy policy is vital to the economic health of our state and country. A balanced approach would be a prudent mix of nuclear, clean coal, natural gas and renewable energy resources. In addition to these physical assets, demand response, energy efficiency and energy conservation should be included in the mix.

However, a balanced approach is needed for renewable resources, as currently these resources may cost up to four to five times the cost of conventional generation. Most states, including Pennsylvania, have a Renewable Portfolio Standard (RPS) which requires that a certain portion of electricity production come from renewable resources.

As government has provided grants and tax incentives for these resources, more resources have been added than needed by RPS. Therefore, states are looking to increase renewable energy requirements, thus potentially increasing the costs of electricity for businesses.

What effect will the development of natural gas from Marcellus Shale have on Pennsylvania businesses?

The abundance of natural gas in the Marcellus Shale has the ability to keep Pennsylvania’s energy prices low for a very long time. These low energy prices will benefit everyone, by either lowering costs or by offsetting other cost increases in electricity and natural gas bills. In addition, drilling is boosting the local economy by attracting new companies, creating direct and indirect jobs, and generating lease and royalty checks for property owners.

The benefit of Marcellus Shale is meaningful. To ensure these benefits, policymakers, industry and the people of Pennsylvania must develop a well-defined and a properly regulated market structure. We all benefit from Marcellus Shale if done correctly — safely, continuously improving technologies and regulations, and with open communications.

What can policymakers in Harrisburg do to provide greater benefits from retail markets?

Pennsylvania’s open energy market has created a competitive business advantage, but more can be done. Executives and consumers still need to be educated on why they should shop for energy and how to navigate the retail energy markets. The Public Utility Commission is currently holding hearings on improving retail markets. There are many opportunities to improve the current market — modifying utility default service plans to better align with current market conditions, enhancing technologies to improve and increase product and service offerings, improving utilization of smart meters and continuing the education process. Fortunately, business leaders don’t have to wait; they can shop the market and enjoy lower rates today.

PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.

Bob Barkanic is senior director of energy policy at PPL EnergyPlus. Reach him at (610) 774-6722 or RJBarkanic@pplweb.com.

Published in Philadelphia

Business owners everywhere are hearing more about renewables. Whether it involves solar, wind, biomass or hydro, the notion of new and renewable forms of energy is becoming mainstream.

But how can the average business enter into the renewable energy fray and reap the benefits of cleaner energy while also maintaining a stable cost structure?

Smart Business learned more from Steven Gabrielle, the director of Asset Management and Development for PPL Renewable Energy, about how businesses can make the new world of energy options work for them.

How can renewable energy help businesses achieve their operational and environmental objectives?

A growing number of businesses are exploring renewable energy options as a way to meet their business objectives for sustainability and social responsibility, generate a portion of the electricity they use and reduce their carbon footprint. Businesses also may be interested in the government incentives and tax credits being offered for renewable energy development.

PPL Renewable Energy and PPL EnergyPlus offer a range of alternatives for businesses interested in renewable energy. We have a successful track record of developing and operating renewable energy projects. For businesses that may not be looking to build generation on-site, our companies offer renewable energy supply and renewable energy credits for businesses looking for a ‘greener’ energy supply that would like to encourage more development of solar, wind, biogas and other renewable sources.

How can working with a renewable energy provider help businesses achieve their greener goals?

With our combined expertise, PPL Renewable Energy and PPL EnergyPlus can help businesses with everything from building a renewable energy project at their site, to purchasing renewable energy credits generated by existing projects. Businesses looking to ‘grow greener’ have a lot of options. PPL Renewable Energy and PPL EnergyPlus can support whatever option interests them.

PPL Renewable Energy owns and operates nearly 50 megawatts of solar, wind and biogas projects in Pennsylvania, New Jersey and New England. PPL EnergyPlus has agreements in place to purchase electricity generated by two wind projects in Pennsylvania, and purchase half of the renewable energy credits from a wind project in West Virginia. Those projects total 132 megawatts of clean generation.

These renewable energy projects offset millions of pounds of carbon dioxide — the equivalent of planting tens of thousands of acres of trees or removing thousands of cars from the road.

We are proud to say PPL Renewable Energy and PPL EnergyPlus are helping businesses to be successfully green. PPL Renewable Energy has been honored by the Environmental Protection Agency for our strong commitment to partnerships and the environment, and recently received an award from the environmental organization Penn Future.

How do customers buy renewable power?

Businesses can purchase energy generated directly by renewable projects, or they can purchase renewable energy credits. These credits are a mechanism established to support the further development of renewable energy projects by giving developers a sellable commodity in addition to the electricity they generate.

Credits can be purchased in the voluntary market, where businesses pay a green energy adder that is provided with their electric bills, or in the compliance market, where credits are tracked for compliance with state renewable energy requirements. PPL Renewable Energy and PPL EnergyPlus are committed to increasing the availability of renewable energy and increasing the diversity of generation sources to meet electricity demand.

We believe the future of renewable energy is bright, and demand will increase as the cost of renewable energy becomes more competitive with other forms of power, and as government mandates require a more diverse and more secure energy portfolio to meet future demand.

What characteristics should business customers look for when choosing their renewable energy supplier?

If you are looking to develop your own renewable generation, look for experience. You want a partner with a proven track record of success in siting projects, obtaining permit approvals and building projects on time and within budget.

On both counts, PPL EnergyPlus and PPL Renewable Energy have a strong presence in the renewable energy market. We have a record of performance and service. We have renewable energy assets. We have built and operate successful projects. We are part of a strong and stable company that has been generating, selling and delivering electricity for nearly a century.

PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. Customers do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.

Steven Gabrielle is the director of Asset Management and Development for PPL Renewable Energy, a subsidiary of PPL Corporation. PPL EnergyPlus markets this green energy for PPL Renewable Energy. PPL Renewable Energy funds, develops, constructs, owns and operates renewable energy facilities in Pennsylvania, New Jersey and New England. To learn more, visit www.pplrenewableenergy.com.

Published in Philadelphia

Executives can’t control the fluctuating economy, rising cost of raw materials or shifting customer preferences. But savvy leaders are taking control of a key business cost — energy — by choosing an energy supplier, selecting a product structure to support their business needs and eliminating financial uncertainty by negotiating long-term energy supply contracts that provide them the price and product structure that meets their needs.

Reducing energy costs by even a small percentage can create a hefty competitive advantage. According to a 2011 report by Aberdeen Research, energy costs make up 25 percent of total operational costs in large U.S. plants, and IBM says that office buildings account for 70 percent of U.S. energy use. The authors note that managing energy costs is a top priority for 68 percent of business executives, and while the top-performing companies are exceeding their goals by 20 percent, the laggards are falling short by almost 11 percent.

“In Pennsylvania, it’s hard for executives to control operating costs if they purchase energy from their regulated utility because their default service prices, in many cases, change every 90 days,” says Annette Durnack, director of Retail Energy for PPL EnergyPlus. “Pennsylvania companies that purchase their energy from a competitive supplier can lock in rates for a term that meets their needs and select from a variety of cost-reducing products, rather than only one product offered by the utility.”

Smart Business spoke with Durnack about how to create a competitive advantage by choosing an energy supplier and complementary product structure.

Why should businesses be thinking about their energy supply?

Energy costs are a significant portion of total business costs for many companies. In Pennsylvania, businesses are not at the mercy of regulated utility rates. Opportunities abound to reap savings by choosing an energy supplier in the competitive market and to realize additional savings by requesting quotes now because prices have dropped 25 percent since the market peaked in 2009.

In addition, businesses choosing a competitive supplier can benefit from a customized slate of products and services that support their business plan. For example, if a company wants to woo new customers by launching a green initiative, it could partner with a supplier that offers renewable energy sources and agree to purchase a portion of its supply from a renewable component. Or if a customer needs to lock in the price of the product they produce for three years and energy is a big part of that cost, locking in an energy supply price can help achieve that objective.

When is the best time to buy energy?

The spring and fall months are traditionally the best time to buy because prices drop as demand ebbs. Beyond optimizing seasonal price differences, companies can garner additional savings by choosing an energy supplier in the competitive market. Companies that don’t choose a supplier will see energy rates fluctuate because regulated utilities change their rates for default service — the service you get if you don’t select a competitive supplier — every three months.

In turn, businesses may have to raise prices for goods and services, which can impact customer loyalty, revenue and margins, and create a climate of financial uncertainty. Companies that partner with a competitive supplier enjoy a competitive advantage because they can contractually lock in prices for 12, 24, 36 months or longer, and choose a product structure to meet their unique business needs.

What products and services can providers offer beyond energy supply?

A competitive supplier can offer renewable energy options that help businesses reduce their carbon footprint, run a green operation and market their environmental stewardship to the community. Some providers also offer companies the opportunity to earn revenue or credits by participating in demand response programs if they are willing to curtail consumption when high electricity use strains the power grid. Companies can select a demand response product that best suits their needs and earn consistent, predictable revenue, even if an energy curtailment event never materializes. Some providers also offer weekly market updates so companies can stay on top of trends in the energy market, request quotes and time their energy purchases to capitalize on falling energy prices.

How can a demand response option benefit businesses?

Companies know the prices they’ll be charged and the discounts they’ll receive when they sign a long-term contract with a supplier and select an appropriate demand response program. And because energy costs make up a significant portion of a company’s operating budget, long-term contract pricing allows them to confidently forecast future expenses and bolster revenue by consummating multiyear deals with their customers. Not every state has a competitive electricity market, so companies that take advantage of Pennsylvania’s open market and demand response programs can get a leg up on the competition.

What are the advantages of bundling energy supply and energy services?

Buying bundled services provides the convenience of one-stop shopping and the opportunity to negotiate an advantageous deal by leveraging your total energy expenditures and purchasing power. Partnering with a supplier offers additional benefits, as a partner is more likely to build a relationship, understand your business plan and challenges, and then recommend a customized slate of services and products that will help your company compete. And an energy partner will help your business tailor your energy purchases to best meet your individual needs.

PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.

Annette Durnack is director of Retail Energy for PPL EnergyPlus. Reach her at AMDurncack@pplweb.com or (610) 774-3182.

Published in Philadelphia