How to Fight Natural Gas Conversions

Transcription

How to Fight
Natural Gas Conversions
Tom Tubman, Executive Director, American Energy Coalition
Richard Rutigliano, PriMedia
Moderated by: Jamie Py, Maine Energy Marketers Association
The Challenge
The Challenge
Significant defection prompted
principally by the current price
advantage that natural gas is enjoying
vs. Oilheat costs.
The Challenge
Market Share (Northeast)
2005
Utility Gas 49.9%
(10.25 million housing units)
Heating Oil 32.3%
(6.65 million housing units)
(2005 American Community Survey)
2012
Utility Gas 52.4%
(11 million h.u. - gain of 755,000)
Heating Oil 26.0%
(5.45 million h.u. - loss of 1.2 mill.)
(2012 American Community Survey 1-Year
Estimates )
The Challenge
Fuel Use Comparison
American Community Survey, US Census Bureau
The Challenge
Change in Fuel Use
The Challenge
Analysis
We can combat these challenges by
reviewing the key issues in the fight
against natural gas, and:
– Identifying both fuels’ strengths
and weaknesses
– Analyzing price vs. value
– Assessing future marketability vs.
historical patterns.
Key Issues
Key Issues
Strengths and Weaknesses
There are strengths and weaknesses in
the positions of our industry as well as
those of utility gas.
•Public Perception
•Energy Prices
•Gas Expansion and Marketing
•Governmental/Municipal Support
Key Issues
Strengths and Weaknesses
•Community Roots/Trust
•Diverse Services
•Full Service vs. No Service
•Freedom of Choice
•Safety
•Environmental Responsibility
•Billing Issues
Key Issues
Public Perception
Natural Gas
•
•
•
•
•
•
Better Value
Cleaner
Environmentally
Friendly
More Efficient
Abundant
Domestic
Heating Oil
•
•
•
•
•
•
Expensive
Dirty
Carbon Dioxide
Leaky Tanks
Limited Supply
Foreign:
– Middle East
– Iran
– Iraq
– Russia
Key Issues
Energy Prices
Utility gas prices – including delivery
and commodity charges – are
substantially lower than heating oil
and have been for several years.
Consumers believe that the cost of
conversion is an investment in longterm savings.
Key Issues
Energy Prices
“Historical” price fluctuations and
even price advantages have much
less influence than recent price
differentials.
This winter’s extreme weather has
increased natural gas prices
considerably.
Key Issues
Gas Expansion & Marketing
The gas utilities spend millions of
dollars per year in advertising.
National Grid spent $3.8 million in US
media in 2012.
The utilities are offering thousands of
dollars in rebates to convert.
Con Ed is currently offering up to
$3,000 for single family home
conversions.
Key Issues
Governmental & Municipal Support
Natural gas has enjoyed
governmental and municipal
support for conversions.
Low carbon fuel standard (LCFS)
initiatives.
The governors of the six New
England states have proposed
increasing electrical utility rates to
pay for expanded natural gas
pipelines.
Key Issues
Community Roots | Trust
Oilheat dealers have been
servicing the community for
several generations.
Many have been in business
for 50, 70, 100 years or longer.
Key Issues
Oilheat Dealers:
•
Pay local taxes
•
Provide tens of thousands
of jobs
•
Support local businesses
•
Support charitable and
service organizations
Key Issues
Most Oilheat dealers are locally
family owned.
Compare that with utilities with
international headquarters, such as
Iberdrola of Spain and National Grid
of Great Britain.
Most utilities are major corporations,
or are divisions of investment firms,
like Summit Energy which is owned
by J. P. Morgan.
In many cases, the same corporation
owns the electric company as well.
Key Issues
Diverse Services
Oilheat dealers do more than deliver
heating oil – they also offer:
• Propane
• Biofuels
• Kerosene
• Autogas
• Air Conditioning
• Plumbing
• Electricity Sales
• And More
Key Issues
Full Service vs. No Service
Oilheat dealers offer
equipment sales, installation,
maintenance and repair.
Many natural gas companies
repair pipeline issues only,
and require property owners
to find third parties to service
equipment.
Key Issues
Freedom of Choice
Heating oil customers can change
providers if they are unhappy with
prices or service.
Natural gas supply may be available
via ESCOs, but delivery remains the
responsibility of the utility.
Key Issues
Safety
Natural Gas:
• Explosions
• Carbon Monoxide Poisoning
• “Call before you dig” warnings
• Mercaptan
Oilheat:
• Non-explosive
• Warning signs when
malfunctioning
Key Issues
Environment/Responsibility
Natural Gas:
• Methane
• Pipeline Leaks
• Fracking
• Flaring
Oilheat:
• Bioheat® Heating Oil
• ULSHO
• Lower lifecycle CO2 emissions than
natural gas at B12 ULSHO/Bioheat®
blend
Key Issues
Billing Issues
Natural Gas bills have hidden charges:
– Delivery Rate vs. Peak Delivery
Rate
– Customer Charges (Fixed
Delivery or Facility Charges)
– Commodity Charges
– Conservation Adjustments
– Sales Service Charges
– Transportation Service Charges
– And More
Oilheat Bills
– Cost per Gallon
– Easy to Understand
Looking Forward
Looking Forward
Fuels
•
•
Bioheat® Heating Oil
– Renewable
– Multiple biomass stocks
ULSHO
Looking Forward
Fuels
Regions with a Bioheat® Heating
Oil or ULSHO mandate:
Connecticut
New Hampshire
Delaware
New Jersey
District of
Columbia
New York
Maine
Maryland
Massachusetts
New York City
Pennsylvania
Rhode Island
Vermont
Looking Forward
Equipment
• Oil-fired condensing boilers
and furnaces
– Efficiencies from 91 to 98
percent
• Alternative energy compatible
(solar and geothermal)
• Smart Technologies
– Wi-Fi
Controls/Thermostats
– Remote Monitoring
– Advanced Energy
Economizers
Looking Forward
Customer Convenience
•
•
•
•
•
Mobile Presence
Text Messaging Services
Email Communications
Social Media Connections
Online Access
 Account Lookup
 Electronic Invoicing
 Bill Payments
 Service and Delivery Requests
 Price Protection and Service Plan
Enrollments
 Loyalty Programs
 Mobile Apps
Price Differentials
Price Differentials
Price: Oil vs. Natural Gas
Comparative Cost per Gallon
(PADD 1 Region)
$3.500
$3.000
$2.500
$2.000
$1.500
$1.000
$0.500
Average Heating Oil Price Per Gallon
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
$0.000
Average Natural Gas Price per Gallon Equivalent
Source: US Energy Information Administration (eia.gov)
Price Differentials
Historical Heating Oil Price Advantage
(PADD 1 Region)
1986 - 2005
$2.500
$2.000
$1.500
$1.000
$0.500
$0.000
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Price Differentials
Natural Gas Futures Contracts
January 2012 - February 2014
(Dollars per Million Btu)
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
Jan12
Feb12
Mar12
Apr12
May12
Jun12
Jul12
Aug12
Sep12
Oct12
Nov12
Dec12
Jan13
Feb13
Mar13
Apr13
May13
Jun13
Jul13
Aug13
Sep13
Oct13
Nov13
Dec13
Jan14
Feb14
Price Differentials
Natural Gas Price Futures
Regional Averages 2004 - 2014
$10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
*2014: January and February Only
3/31/2014
3/24/2014
3/17/2014
3/10/2014
3/3/2014
2/24/2014
2/17/2014
2/10/2014
2/3/2014
1/27/2014
1/20/2014
1/13/2014
1/6/2014
12/30/2013
12/23/2013
12/16/2013
12/9/2013
Delivered
Price
Natural
Gas
(US$ )
12/2/2013
Price Differentials
Spot Daily Pricing
Transco Zone 6 (NY)
12/2/13 - 3/24/14
140
120
100
80
60
40
20
0
Price Differentials
Price Differentials
Historical Heating Oil Price Advantage
(PADD 1 Region)
1986 - 2005
$2.500
$2.000
$1.500
$1.000
$0.500
$0.000
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Weather and Supply Issues
Expanded Natural Gas Usage
• Oil to Gas Conversion
• Electric Generation
• Chemical Feedstock
• Electric Generation
•
•
•
•
LNG Export
Chemical Feedstock
Electric Generation
Oil to Gas Conversion
•
•
•
•
•
Heavy Manufacturing
LNG Export
Chemical Feedstock
Electric Generation
•
•
•
•
•
•
LNG/CNG Transportation Fuel
Heavy Manufacturing
LNG Export
Chemical Feedstock
Electric Generation
Aging Infrastructure
• Pipeline Capacity Limitations
• Pipeline Safety/Public Safety Shortcomings
• Environmental Concerns
• Pipeline Safety/Public Safety Shortcomings
Other Natural Gas Issues
•
•
•
•
Market Price Below Cost To Produce
Drillers Moving Gas Drill Rigs To Oil
Underestimated Fracked Weld Yield
SEC Disclosure Compliance
Fight Back
Control the Messaging
Fight Back | Control the Messaging
Fighting Back
• Website Content
• Social Media
• Blogs
• Pay-Per-Click
• Email Blasts
• Newsletters
• Brochures/Sales Kits
• Postcards/Direct Mail
• Flyers/FSIs
• Letter Writing
• Message-on-hold
• Print Advertising
• TV/Radio Advertising
• Videos
• CSR/Staff Training
Messaging must resonate with the
consumer.
The natural gas utilities are talking about
the perceived immediate price benefit to
switching.
Our task is to turn the conversation to
the other issues involved in a fuel
conversion that will personally affect
that individual.
Bill Inserts / Leave Behinds
Postcards
Cost to Convert
Cost to convert – between
$4,500 - $11,000.00
• New boiler or furnace
• New water heater
• Gas line installation
• Permits and taxes
• Chimney liner
• Oil tank abandonment or
removal
• Plumbing and electrical
• Landscaping
Cost to Convert
Purchasing high-efficiency natural gas
equipment can push those estimates
further.
Financing a conversion puts the
homeowner in debt with no
guarantee of pay-back.
Natural gas utilities’ ROI estimates are
based on best-case/high-efficiency
calculations.
If natural gas prices continue to rise, the
payback term gets longer and longer.
Cost to Convert
Prices are expected to rise with
increased exports.
At price equity or Oilheat advantage,
there may be no payback.
Upgrading to higher-efficiency Oilheat
equipment can reduce usage by 3040% at a fraction of the cost.
Newsletters Print & Digital
Social Media
Insufficient Supply
• There is not enough natural gas
supply coming into the region to
meet demand.
• Utilities rely on interruptible
supply – shutting off gas service
to specific users – to maintain
service elsewhere.
• Higher demand creates higher
prices.
Insufficient Supply
Natural gas pipelines often need to be
shut down, leaving homes and
businesses without service for hours –
or even days.
Heating oil and propane are stored on
your property safely – and automatic
delivery means you don’t have to worry
about running out.
Email Blast
Print Ads
Fugitive Emissions
Consumers paid $20 billion for gas
they never received between 2000 –
2011.
Gas companies make money off
lost gas because they are
reimbursed even if it never
reaches the home.
In 2011, utilities nationwide
released enough gas into the
atmosphere to meet Maine’s
energy needs for a year.
Fugitive Emissions
“American consumers, businesses
and communities now pay for gas
they don’t receive.”
Markey Report
With heating oil, you only pay for what
you receive from metered delivery
trucks.
Blogs
Letter Writing
Ease of Conversion is Misleading
Converting your heating system takes
a lot of time, effort and money.
The property owner needs to:
• Research available equipment
• Find a company to install the heating
equipment
• Have their existing heating system
removed
• Have their oil or propane tank
removed or properly abandoned
• Re-landscape their property
• Take several days off from work
• Arrange for maintenance or repair
services
Ease of Conversion is Misleading
Once your home is connected to a
pipeline, you won’t be able to
switch to another distribution
company.
If you are unhappy with service or
price from a heating oil dealer, you
have the freedom to switch to
another company.
Flyers/FSIs
Upgrade and Save
Same-fuel upgrades can usually
be completed in one day, using
one company for all the work,
without any damage to your
property.
Brochures and Sales Kits
CSR / Employee Training
Take Home Points
Management
CSRs
Vendors
Core Message
Service Techs
Marketing
HR
Sales
Delivery
Personnel
Take Home Points
How to Fight
Natural Gas Conversions

How to Fight Natural Gas Conversions

Transcription

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