2007 Energy Outlook

Overall, 2007 is projected to look a lot like 2006.

Members of OPEC recently reduced oil production and cold weather blanketed much of North America. Demand for crude oil and natural gas was higher than expected.  As demand went up and supply inventories went down, spot prices increased.  However, 2007 is projected to be a year for fairly moderate energy prices that should remain below the post-hurricane highs that punctuated 2005.  In the same breath, expert opinion still cautions that supply-demand ratios will remain tight, market pressures will continue to increase, and volatility will continue to afflict the energy markets (EnergyWindow, 2007).

Gasoline prices are expected to peak at an average price of $2.67 between now and June.  In 2007, the average gasoline price per gallon is projected to be 20 cents less than last year.  The average gasoline price per gallon from April through September is projected to be $2.60 (eia.doe.gov).

Renewable or "green" energy is growing in popularity.  As more entities become aware of the benefits in utilizing renewable energy in construction and facility management, renewable energy is a focus of energy innovations.  This trend is expected to continue.  Renewable energy is generally available at competitive prices and often results in long-term savings.

APPI's electricity procurement service is available in competitive deregulated states.  The service identifies pricing and product options from several suppliers to allow the business to make a prudent decision.  Savings and budget certainty are both valuable elements to add to any businesses' budgeting.  APPI is currently able to offer electricity procurement services in the following states: CT, DC, DE, IL, MA, MD, NJ, NY, PA, and TX. 

Contact APPI's consultants at (800) 520-6685 or info@appienergy.com for more information on the 2007 Energy Outlook.
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 Illinois Electricity Deregulation Process

Illinois' current competitive deregulated electricity market is the result of a ten year rate freeze.  Previously artificially low electricity rates have resulted in a major shock to many consumers since rates increased January 2, 2007 to reflect market rates.

1. The Illinois electricity deregulation legislation was formulated in 1995-1996.
2. For ten years, electricity supply tariff rates were “frozen” at 1996 levels for all Illinois electricity customers.
3. In October 1999, deregulation (customer choice) began with a “phase-in” period, but few consumers left Commonwealth Edison (“Com Ed”) and Ameren because the competitive rates offered by electricity suppliers were consistently higher than the “frozen” tariff rates.
4. A date was established for the complete opening of competitive markets for all Com Ed and Ameren consumers – January 2, 2007.
5. On January 2, 2007 the electricity supply tariffs that had been “frozen” at 1996 levels ended. They were replaced by new Default Service rates established through “electricity auctions” held in the fall of 2006. The auctions had 39 rounds of bidding with scores of electricity suppliers participating. Sixteen electricity suppliers won at least one round of bidding to supply Com Ed and Ameren the electricity used for their customers who stay with them on the new Default Service supply rates. The auctions were reviewed and certified by the Illinois Commerce Commission (“ICC”) as being fair and meeting the guidelines established.
6. The new Default Service supply rates established by the auction for Com Ed and Ameren for commercial and industrial accounts are 30-75% higher than the frozen rates that had been in place for 10 years. The new default rates are scheduled to remain in effect through May 2008.
7. As of February 2007, there were 15 Alternative Retail Electricity Suppliers (‘ARES”) selling electricity to commercial and industrial consumers in Illinois. Four more companies have registered with the Illinois Commerce Commission to become licensed ARESs.
8. The prices offered by the ARESs have been 5-25% below the new Default Service rates.
9. By the end of June 2007, it is expected that approximately 75% of the total commercial and industrial electricity load in the Com Ed service territory will leave the Com Ed Default Service and choose to be supplied by an ARES.
10. There has been much discussion and review of the new default Residential tariff rates that were increased 40-55% beginning on January 2, 2007. Com Ed and Ameren have shown a willingness to assist their residential consumers by offering residential customers the choice of an Opt-In Rate Stabilization Plan. This program defers some of the increases over an extended period.

APPI is assisting hundreds of Illinois businesses with electricity solutions in the changing market.  Encourage your members with Illinois locations to contact APPI immediately--while savings opportunities exist.  Members can reach APPI at (800) 520-6685 or info@appienergy.com. 
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 Quarterly Rate Changes in Maryland Begin in June

Maryland electricity prices increased between 14 and 53% for businesses in June 2006.  Beginning June 2007, Maryland businesses will be subject to quarterly tariff rate changes.  The quarterly rate changes will not be known more than a month or two in advance of each quarter. 

Fluctuating prices and four rate changes annually create a volatile electricity market and make budgeting difficult.  Many businesses are unable to absorb quarterly rate fluctuations.  APPI offers competitive pricing and fixed price options to mitigate the effects of the uncertainty in the market. 

Fixed rates allow a business to guarantee the price that will be paid every month for the duration of the supply contract; there is no rate increase or decrease from month to month.  When operating with a fixed rate, a business is unaffected by variable rates and market price changes.  Furthermore, if a fixed rate is secured, budgeting can be done with a high degree of accuracy, resulting in simplified account management for the business.

Members with Maryland business locations can contact APPI now to learn more about the quarterly tariff changes.  APPI will assist members by securing competitive pricing that will allow ongoing budget certainty.

Contact APPI at (800) 520-6685 or info@appienergy.com.
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 Making the APPI Savings Solutions Program a Success

Making the APPI Savings Solutions Program a success with your association is important.  If member activity in the Program has potential for growth, consider these keys to success:

If you have any marketing questions or ideas to increase member activity in the Program, please contact Mandi Krack at (800) 520-6685 or mkrack@appienergy.com.
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 APPI Profile: Suzanne Hearn

Meet Suzanne Hearn.