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‘Window of Opportunity’ in the gas market closing

‘Window of Opportunity’ in the gas market closing

by | May 21, 2012 | Energy

Renegotiate your gas contracts within the next 12 months or risk being tied into contracts based on higher unit costs – that’s the advice from specialist power, gas and ICT procurement specialists, Total Utilities Management Group.

Gas customers have been enjoying favourable pricing since 2009 as a result of ‘Take or Pay contracts’ in place between gas-based electricity generators and their wholesale gas suppliers.  These contracts commit energy/gas retailers to buying a certain amount of gas at a set rate, irrespective of the amount sold on.  This has periodically resulted in retailers looking for a good home for their excess gas – with near wholesale prices being offered to some retail customers as a consequence.  But be aware, these ‘Take or Pay’ contracts are due to expire within the next 12 months as we understand it.

Prior to 2009 the trend of rising gas prices caused an increase in the size of the recoverable reserves in the Maui Gas Field.  This also had a dampening effect on the market rate – all good news for consumers.  However, the pockets of gas from Maui are now becoming less reliable – the first reserves extracted were graded P85 (85% probability of successful extraction) but we’re now moving towards P50 reserves (50% probability) and this leads to increased retailer uncertainty which means that more risk, and therefore more cost, is built into customer contracts.

These two trends add up to a strong indication that the clock is ticking for this period of low natural gas pricing.  Unless something significant changes, we believe that the current period of low pricing will last for less than 12 months.  TUMG is currently bringing forward our client’s major natural gas negotiations so that we can lock in the low pricing for the next three years.

Our most recent bulk gas tender, completed in March this year covered a diverse range of customers, large and small, and achieved savings averaging $53,900 per customer over a three-year period for 19 of the 22 customers.  Five customers cut their gas costs by between 22% and 36%.  If you’d like advice or support in any utilities contract negotiation, just give us a call on 09 576 2107 or email [email protected]

Schools Cut Utilities Bills by $620,000

Schools Cut Utilities Bills by $620,000

by | Feb 20, 2012 | Energy, Waste

At a time when every sector in New Zealand is feeling the pinch, 102 schools across New Zealand have found a way of making their money go further. 

Part of the solution for a large number of primary, intermediate and high school business managers has been to bring in specialist services to negotiate their power, gas and waste services contracts to make sure that their schools are not paying over the odds.

According to school business managers, bringing in third parties makes sense on a number of levels.  Having to deal with a wide range of different tasks is one of the challenges managers face on a daily basis, this makes it impossible to be an expert across the board.  Buying in expertise and handing over the more specialist jobs seems to be a logical step.

Business Manager at Pakuranga College, Graeme Brown is an advocate of this approach.  “Over the 11 years that I’ve been in this job, I’ve come to realise that it makes sense to leave utilities contract negotiation to the experts.  I don’t even think about our contracts now, TUMG notify us when they are due for renewal – it’s great to have something taken off my list of priorities.”

The opportunity to join forces with other schools and go out to market in bulk tenders is another plus point for bringing in a specialist.  Richard Gardiner at Total Utilities Management Group (TUMG) has been putting together power, gas and waste services bulk tenders for  ten years and sees them bringing real advantage to his clients.

“When we put out a bulk Request for Proposal to suppliers, the bigger the piece of business, the sharper the pricing tends to be.”

But Mr Gardiner is quick to stress that it’s not all about the price.  (more…)