The September natural gas wholesale contract fell 6.2 cents, or 1.57%, to $4.145 on the New York Mercantile Exchange on Friday. It seems that moderating temperatures and the lack of a threat from Tropical Storm Don kept pressure on natural-gas wholesale contract Friday as energy traders continued to see ample supply in the market. As we have discussed in past commentaries, the shoulder months of September and October have historically seen lower prices as we attempt to find a bottom before energy traders anticipate the winter and we have our pre-winter rally. News on Capitol Hill that U.S. politicians reached an agreement to lift the debt ceiling before the August 2 deadline has lifted the financial markets and some commodity markets this morning. Both houses of Congress must still vote on the deal, an event expected to take place this afternoon.
On the deregulated front, a growing number of American Electric Power customers in Ohio are choosing alternative electricity providers, putting a dent in the company's sales for the second quarter. Ohio opened the door to electricity shopping with a 1999 law, but competitive suppliers have had a tough time gaining traction in AEP’s territory, which has long had the lowest rates in the state. That has changed after a series of rate increases and a drop in wholesale electricity prices. At the end of the first quarter, 31 percent of central Ohio AEP commercial customers were getting their power from an alternative provider, as were 13 percent of industrial customers and less than 1 percent of residential customers. Those are the most recent switch rates for AEP's Columbus Southern Power subsidiary, compiled by state regulators. An AEP spokeswoman said that additional switching in the second quarter was largely by commercial customers. On the residential side, the biggest change was Reynoldsburg's decision to switch its households to an alternative supplier, which affected about 7,000 customers.
On the efficiency front this morning, Avista Utilities has begun mailing 350,000 kits with eight compact fluorescent bulbs to residential customers in Washington and Idaho. The effort is part of Avista's goal to encourage customers to use less electricity, according to a company spokeswoman. The kits should reach all customers by the end of November while costing Avista roughly $7.5 million to buy, package and mail the kits. The money for that project comes from a monthly energy-efficiency surcharge Avista collects from its customers. Washington customers pay $3.79 per month for an average of 1,000 kilowatt-hours of electricity while Idaho customers pay $2.58 per month for an average of 1,000 kilowatt-hours. If all residential customers replace eight standard, less-efficient light bulbs in their homes, the result will be a reduction of nearly 90,000 megawatt-hours of electricity over the next 12 months according to the company.
In the lone star state this morning, TXU energy lost a net of 33,000 residential customers from March 31, 2011 through June 30, 2011, the company reported in a 10-Q this morning. That compares with a loss of 32,000 residential customers from December 31, 2010 to March 31, 2011 to alternative suppliers. Residential churn for prior quarters dating back to the year-ago quarter was as follows: Net loss of 29,000 from September 30, 2010 through December 31, 2010, Net loss of 30,000 from June 30, 2010 to September 30, 2010, Net loss of 19,000 from March 31, 2010 through June 30, 2010. TXU's large business customer count as of June 30, 2011 was 20,000, down from 22,000 as of March 31, 2011 and 22,000 a year-ago. Executives said during an earnings call that the business customer attrition reflects margin discipline, (on who’s part the customer’s or the company’s). Lower average pricing accounted for $45 million of the decrease, reflecting declining prices in both the residential and small business markets. Lower average pricing is reflective of competitive activity in a lower wholesale power price environment and a change in business customer mix.