Have commercial electricty rates hit bottom?

Have commercial electricty rates hit bottom?

For businesses whose livelihood depend heavily on their commercial electricity usage the question of how low can rates go has been top of mind over the past year. Since the peak in 2008 we have watched a steady price decline of about 75% when you consider the energy only component of your rate. That resulted in wholesale electricity rate peaking around $.12 per kwh and then steadily trending down to the $.03 range.

There were many analyst who predicted that natural gas might actually fill up in the U.S. that could have caused producers to drop their price below $1 per MMBTU just to avoid penalties associated with exceeding their capacity thresholds on transportation and storage. Now that we have drawn down supply in storage down that scenario is off the table until we get into next winter. To be clear it looks as if we will start the injection season early and the possibility of filling up storage may become a concern again in starting in November.

So last week we saw natural gas post 10 year lows again. The natural gas market closed today at $2.15. Naturally this meant that commercial electricity rates hit 10 year lows as well. The chance of rates going lower from here still exists, but I think most would agree that the downside from here is limited, while the possibility that prices will spring back up to more sustainable levels is more likely.

If you are within 12 months of the expiration of your current electricity contract then it is certainly a prudent time to at least take a look at what the market will give you. We have seen many buyers take this opportunity to lock in for 3-5 years. Contact us if you would like to find out what your commercial electricity product and rate options are.Commercial Electricity Rates


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