New York Energy State of Mind: What’s driving your energy prices?

Part 3 in our 6 part blog series identifying price drivers in the core U.S markets road trips to the Empire State.

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In the third installment of our series we headed up to New York. Read on to understand how New York’s evolving energy profile affects your cost of energy. (To view other posts in this series, click here.)

Major Deregulated Utilities: Electric & Natural Gas

The deregulation of electricity generation allows consumers to choose the supplier from which they buy their power. Local utility distributors continue to deliver the power, for a fee, over their lines. When it comes to energy deregulation, each state faces a different energy situation and is taking a different approach according to Energy Deregulation New York.

New York based facilities have the ability to competitively purchase energy from these deregulated utility providers.

Trane_NY_Electric_Natural_Gas_Markets.jpgLike the other states we have profiled, procurement has the opportunity to shop for the most competitive provider in New York for your energy needs. If this spend is left unmanaged, your facility will be placed in the ‘default service;’ which serves as a benchmark for pricing in your market.

The default services typically change each month, meaning you won’t have price stability. By competitively shopping for the best offering in your market you can affix your rate and budget spend appropriately.

Mass-Market Energy

In December of 2016 the Public Service Commission issued notice 98-M-1334, essentially questioning the retail energy model for ‘mass-market’ consumers.

What this means for procurement is that currently the future of energy deregulation in New York is uncertain. As a result, many third party energy suppliers have stepped back their marketing and their pricing efforts. This makes it more vital than ever to competitively shop for your facilities energy in order to uncover the best offering for your operation.

Suppliers Registered with the Public Utility Commission

According to the New York Department of Public Service there are 130 registered natural gas and 129 registered electricity providers servicing the supply needs of customers in NY. The surplus number of suppliers incites competition, but also can create confusion. Selecting a supplier can become complex for procurement due to the quantity of offerings. Since New York has some of the highest energy prices in the country, with electricity being 58% higher than the national average, being vigilant in locating the most optimal supplier for your facilities unique energy profile will be essential in reducing the risk for excess spend.

New York Independent System Operator (NYISO)

Population and operations distribution across the state creates unique energy demands. According to the New York Independent System Operator (NYISO), the state’s wholesale electric grid managing generation supply, in 2015 New York City represented 33.1% of electricity consumption and Long Island represented 13.5%, concentrating almost 50% of state electricity demand into a very tight geographic distribution.

NYISO has created an energy price model that allows for regional price differences for the cost of providing electricity generation across the state. NYSIO breaks the state into zones with bi-annual capacity auctions, setting the price for generation for each zone.

NYISO-Zones.jpgProcurement needs to be clear on what zone their facilities are located in so you can properly manage energy cost. Zonal commodity pricing has much less variance than the variance procurement can expect with capacity costs.

NYISO provides real time market zonal information detailing the marginal cost of energy, day ahead zonal information and zonal loads, and interface flows. Understanding how your operation’s zonal location will affect your pricing will help procurement strategically manage spend while making informed energy buying decisions.

Stand Out Big Apple Energy Facts

NY_Energy_Facts.jpgENERGY MADE EASY

As we have found with each market analyzed in our ongoing series, New York’s energy structure and pricing is distinctive. Working with a supplier partner to help identify opportunities for cost savings and outlining your facility’s specific needs can help procurement make informed buying decisions that will mitigate potential localized risks.

Want to learn more? Watch an on-demand webinar from our partners, the experts at Trane Building Advantage to take a deeper dive into understanding your electricity and natural gas pricing.

MORE ARTICLES IN THIS SERIES

OHIO: Understand how to make smarter energy buying decisions in the Buckeye state based on local price drivers.

TEXAS: Discover what influences energy pricing in the Lone Star state in order to appropriately manage your energy spend.

ILLINOIS: Take an indepth look at localized spend indicators in the home state to the Windy City. 


Trevor Joelson: Business Development Manager at Trane Building Advantage
As the Corporate United Energy Program Manager for Trane Energy Supply Services, Trevor partners with CU Members to ensure they achieve low cost electricity and natural gas supply for their facilities across North America. Trevor specializes in electricity generation trends and their impact on retail pricing. Trevor received his Bachelor of Arts degree in Sport Administration with minors in Marketing and Political Science from the University of Louisville in Louisville, Kentucky.