Switching Back to the Utility Pays Dividends
When Pacific Gas & Electric (PG&E) offered a fixed price for electricity for three years, Fellon-McCord engaged several California manufacturers that qualified for this service and analyzed the potential benefits of switching from the open market back to the utility. The concept of switching back to the utility for power supply seemed inconsistent with the perception that market rates are always lower than utility supply. Fellon-McCord was able to analyze the forward price curve for electricity supply in Northern California, taking into account the major variables affecting prices such as fossil fuel costs, generation and dispatch, transmission costs and congestion. A thorough understanding of PG&E’s fixed-price offer versus the potential future prices that could be obtained in the open market led Fellon-McCord to advise several customers to switch to PG&E, saving tens of millions of dollars during the past three years.
Energy Audit Yields Millions of Dollars in Distribution Cost Savings
A manufacturer in Alabama was looking for ways to save money on energy and hired Fellon-McCord to perform an energy audit of its facility. In the course of conducting the audit, Fellon-McCord reviewed the utility distribution costs and the tariff and discovered that the costs to the manufacturer for the distribution of natural gas were four to five times the state and national average. This discovery led Fellon-McCord to go beyond the scope of the original energy audit project to examine the possibility for bypassing the utility. Fellon-McCord determined the distance of the end-user from an interstate pipeline and found that the customer was two miles from a source capable of delivering sufficient and reliable supplies of natural gas. Working with an outside vendor, Fellon-McCord oversaw the construction of a pipeline, hot-tap and meter station, bypassing the utility and saving the customer in excess of one million dollars per year in natural gas distribution costs. The cost of the pipeline and associated infrastructure was paid off in less than one year.
Quick Action Avoids Price Surge
The 2005 Atlantic Hurricane Season was among the most active in a generation. On the afternoon of Friday, August 26, 2005, Fellon-McCord’s meteorologists alerted staff that Hurricane Katrina had radically shifted course to the south during the previous hour, would intensify to Category 5, and would strike the heart of Louisiana’s offshore natural gas producing infrastructure over the weekend. With the settlement of the September NYMEX natural gas contract the following Monday afternoon, Fellon-McCord recognized the potential for an extreme spike in natural gas prices upon the market open on Monday morning. With this potential in mind, Fellon-McCord mobilized to speak with every client in person, communicate the urgency of the situation, and arrange for after-hours purchases of forward natural gas requirements. In those critical hours, our clients were able to protect billions of cubic feet of gas volumes against one of the most severe price surges in history.