SUPPLY & MARKET ANALYSIS
J.Pollock is well versed on how competitive and regulated energy markets work. Our knowledge of key market fundamentals that determine reliability and price and 24/7 access to commodity, fuel and emission prices, and regional/utility specific supply and demand curves provide important information and insight into developing and implementing a comprehensive energy strategy.
J.Pollock brings substantial financial and market knowledge and expertise to assist you in determining the value of your assets. This includes both physical assets (power plant, transmission/distribution facilities) and contractual assets (power purchase and sales contracts, natural gas contracts, electric/gas transmission contracts). An asset valuation analysis will provide important guidance in determining the potential value of a sale or acquisition. We will help you make the right decision.
J.Pollock has conducted numerous financial and economic studies of investor-owned utilities, municipal utilities, cooperatives and other energy suppliers throughout North America. This includes Revenue Requirements, financial integrity, cost-of-capital, Cost-of-Service Studies, Rate Design, tariff terms and conditions, Resource Plans, fuel procurement and purchased power contracts. Our relationship with S&P provides instant 24/7 access to all FERC, SEC, and other regulatory filings, investor presentations, news, and financial, operational and economic data for electric and natural gas utilities, power plants, and coal mines. These tools and our client focus ensures a comprehensive and timely analysis.
J.Pollock has the knowledge and expertise to assess the impact of utility mergers and acquisitions on horizontal and vertical market power. Where a supplier is found to be “pivotal,” we can identify mitigation measures that would allow energy and ancillary services markets to remain structurally competitive.
J.Pollock has the tools, market knowledge and expertise to develop electricity and natural gas price forecasts. This includes forecasts at the wholesale and retail levels in both regulated and competitive markets. A price forecast is an excellent tool for analyzing the impact of energy costs on existing operations, expansion projects or new projects. Price forecasts are part of an overall energy procurement and management strategy, including whether self-generation or demand-response programs are beneficial.
J.Pollock conducts surveys of regulated and competitive market prices to assist clients in benchmarking current supply arrangements. Less complex and less involved than a Price Forecast, a price survey can provide key market intelligence. With access to industry surveys and other information, a client can be confident about making initial decisions and whether it is timely to consider alternatives.
Electricity consumers may choose to make their own electricity rather than buy it from the local utility. Self-generation has become more economical because of improving technology and declining equipment costs. The economics of self-generation depend on a variety of factors including future purchased power rates, access to and the cost of alternative fuels, whether there is also significant on-site thermal energy (steam) requirements, the availability and level of standby rates (to replace self-generated power during outages), and environmental considerations. Because of the high up-front investment, the economics of the make-or-buy decision also depend on the long-term prospects for the site.
The deregulation of natural gas means that large energy consumers may not have to purchase gas from a local distribution company (LDC). A better strategy could be to purchase gas in the market (either from marketers or directly from producers). Purchased gas can then be transported directly to the consumer or to the consumer’s LDC. Transportation can be arranged directly from an interstate pipeline or through a marketer.
Gas consumers that purchase transportation from an LDC may be able to bypass that LDC. This strategy is viable when the LDC’s transportation charges are excessive and the consumer’s facility is close to an interstate pipeline. Even when the economics are favorable, bypass can be contentious. LDCs do not like to lose large customers and will push back. Thus, even the threat of bypass may result in lower costs.
A client asked J.Pollock to determine whether it should consider expanding its on-site generation to offset rate increases due to rising fuel prices and large capital costs for environmental improvements and new gas/nuclear capacity to meet projected demand. The dilemma is that this client is already buying power from the local utility at the best possible rates and at the time, the utility’s rates were below the national average. J.Pollock conducted a long-term forecast of the utility’s costs taking into account the projected capital expenditures and a wide range of scenarios considering future coal and natural gas prices (obtained from public sources and the client’s own forecasts) and potential carbon impacts. The forecast revealed that rates would gradually increase to a level where additional self-generation would become economic. Despite the scope and complexity of the forecast and the many different scenarios considered, the client received valuable insights and was charged less than 0.5% of the client’s annual electricity costs.
"This client is already buying power from the local utility at the best possible rates..."
Market knowledge is an essential tool for a proactive energy procurement and management strategy. J.Pollock assists clients in providing the data and expert analysis of market conditions (supply, demand, congestion management, market rules) to identify energy opportunities, anticipate wholesale price trends and know what to ask for in a purchase or sale contract. Through S&P and other sources, we have unlimited 24/7 access to:
- Electricity and natural gas commodity prices
- Power projects
- Fuel contracts
- Nuclear status and outage report
- Power contracts
- Capacity and generation
- Transmission contracts
- Historic and future capacity
- Natural gas storage
- Power supply curve
- Natural gas contracts
- Emissions data
- Awarded capacity release
- System loads
- Pipeline operationally available capacity
- Historical loads
- Retail electricity and gas sales by state
- Load and energy forecasts
- Coal data