August 2022 Volume 4

OPERATIONS & MANAGEMENT

Your Last Wake Up Call: FERC 2022 Summer Assessment By Bob Ricobene

Ever since natural gas prices hit historic lows in the summer of 2020 we’ve been actively warning large energy buyers of rising natural gas and electricity prices and, more importantly, providing clear guidance on what they can do to mitigate the impact of rising prices on their energy budgets. In two very recent articles, Don’t Let Energy Prices Get Away from You – Manage Risk Now and Procuring Energy in a Time of War and Volatility , we pointed out the latest factors driving up energy prices and the urgent necessity of forgers engaging with us now implement an energy risk management plan and a process-driven approach to procure energy most strategically. You don’t have to just take our word for it. The Federal Energy Regulatory Commission (FERC) just published its 2022 Summer

Assessment, and the news isn’t good. Specifically, and in keeping with what we have been saying, this summer’s natural gas and electricity prices, which have already surged way above what most could have imagined last year, are likely to "increase by 77 percent and 233 percent, respectively.” The FERC report goes on to say: “Growing demand for natural gas, including liquefied natural gas (LNG) exports, is expected to outpace the growth in supply, with natural gas prices expected to be higher than last summer. Specifically, the Henry Hub futures contract price is averaging $7.06/MMBtu for June 2022 through September 2022. Total U.S. dry natural gas production is expected to rise this summer by 3.4% compared to summer 2021, while total natural gas demand is expected to rise 4.8%.”

Simply put, demand is outpacing supply, and that’s without factoring in remaining extreme summer heat and storms. If your current energy strategy is to wait and hope for good news on the energy-price front, we wish you well, but strongly encourage you to do more than hope. For large energy consumers such as FIA members, the longer you wait the worse this is going to get, especially if your energy contracts are expiring in the next 12-18 months. FERC’s findings should be your final wake-up call. Help is just an email away. Contact Transparent Energy via Jonathan Le at jle@transparentedge.com. Bob Ricobene Executive Vice President, Sales Transparent Energy

Utilizing Transparent Energy’s services is a free benefit to all FIA members. If you have questions or would like to inquire on how TE can save money on energy cost, please contact: Tricia Abruzzino Membership Programs & Sales Manager Phone: 216-781-6260 Email: tricia@forging.org

FIA MAGAZINE | AUGUST 2022 52