Cold Tempatures Could Mean Rising Energy Costs for Government Agencies

With a major winter storm behind us, many people are faced with the challenge of shoveling snow and navigating icy sidewalks. For public buildings, cold temperatures and winter storms present an additional challenge, rising energy costs.

Winter time can significantly increase natural gas usage, the primary fuel used for heating in the northeast.

According to the most recent data by the Energy Information Administration, the daily price for natural gas in the New York City region increased 60% to $3.57 from January14 through January 20th. These price increases are directly passed onto large energy consumers such as municipal buildings, high rise structures, and apartment complexes.

“In prior years, cold spells significantly increased the costs we incurred to heat our 50-unit facility,” said Paul Caverly, former executive director of the Belmar Housing Authority. “This has been a result of not only using more natural gas, but paying a higher price for that gas.”

To avoid these price shocks, government agencies are purchasing fixed contracts ahead of the winter time. This allows them to lock in a set price in anticipation of unpredictable winter weather.

“Working with our consultant, we decided on a strategy that would fix our prices for the December through March time period,” Caverly said. “While our natural gas usage increased with colder temperatures, the price we paid was set in stone, allowing us to avoid significant natural bill increases.”

With energy accounting for nearly 30% of a typical building’s operating expense energy procurement represents a huge opportunity for owners to reduce costs.

The idea is to create competition by pitting suppliers against one another in multiple bidding rounds. This action ensures the client receives the lowest possible quote for their usage while allowing for price discovery and a clearer picture of the market.

“Our goal with the Belmar Housing Authority was to remove the chance of winter natural gas prices eroding the Authority’s budget,” said Tom Price, co-founder of Bostwick Energy Partners says Price. “We obtained competitive offers for the winter period, which also allowed them the flexibility to take advantage of lower prices in the warmer seasons.”