Your Energy Manager
Topic: Natural Gas Procurement
May 2006
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Independent Energy Consultants, is comitted to helping its clients make well-informed and cost-effective decisions regarding their energy supply and consumption. We are sending you this newsletter to help you understand how energy decisions that are made, or not made, effect your company's bottom line.

Natural gas consumers across the United States have just concluded the winter heating season by paying record high prices. For heavy users in the industrial sector, the pain was so great it caused some to close shop or move outside the country. The picture, however, is improving. Natural gas prices have been on a steady decline since December 2005. The drop is due primarily to an unusually warm winter that sent inventories of working gas in storage to record high levels. The oil and natural gas production that was lost in the Gulf of Mexico during hurricanes Rita and Katrina has steadily come back on line further improving the supply picture.

Auction
By now everyone has either bought or sold something on EBay or knows someone who has. Purchasing energy is undoubtedly more complicated than purchaing a Mickey Mantle baseball card, but the concepts are the same. On-line buyers need to know the auction platform gives them the ability to create price transparency and efficiently solicits bids from a multitude of suppliers. The final pieces of the energy buying puzzle are knowing where and when to go out to market, and the insight to contract at the right price and terms. Independent Energy Consultants brings together that combination of intelligence and tools to enable energy buyers to procure energy more efficiently. Our ability to provide personal attention and conduct internet reverse auctions has proven to deliver the lowest price available in the market. The auction platform we use is designed with fixed end times, direct entry bidding and other features to favor you the consumer.

With energy costs rising and the ability to choose suppliers, corporate compliance is becoming a hot topic at the executive level. Our process and platform ensures your organization will meet Sarbanes-Oxley requirements and those of your toughest auditors.

As a company who uses both paper Request for Proposals (RFP) and internet auctions, we are convinced that larger customers benefit more from the latter. The effeciency and competition are increased, and about 20% of the time the winning supplier outbids itself at the last minute to ensure they win your business.

The amount of natural gas in underground storage is one of the primary fundamentals that influence the price of natural gas. In the United States our peak demand comes during the winter heating season months of November through March. To meet that demand, suppliers must inject and store gas during the spring and summer months so it is ready for withdrawal when needed.

Due to an unseasonably warm winter inventories of natural gas in storage are at record high levels. As of May 11, the working gas in storage was 1,985 billion cubic feet (bcf). That is well above the high range for the previous 5 years, and 56 percent above the 5-year average. In fact, many in the industry expect that if we continue with "normal" levels of storage injection we could be filled to capacity before the summer ends. With capacity full and producers not wanting to shut down rigs, prices on the cash market could plummet.

Contact us for your energy management needs.


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