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Energy Essentials for Cost Reduction

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  1. Energy Essentials for Cost Reduction NIPA 4th October 2012 Title of presentation and date

  2. Presentation Overview • ESB Group / Electric Ireland • Market Price Drivers – Electricity • Procurement Options • Summary Title of presentation and date

  3. About ESB Group Title of presentation and date

  4. About Electric Ireland • Competitive supply business of ESB Group: • Established in 2000 – 32 county business • Wholly owned subsidiary company of ESB • Selling generation output to I & C market from • Synergen CCGT, Ringsend (400 MW) • Coolkeeragh CCGT, Derry (400 MW) • Renewable energy sources • Pool Pass Through Contracts • Offering tailored solutions • Competitive STOD prices • Retail Gas Offers (ROI & NI) • Energy Efficiency Services • High Quality Customer Service • Emphasis on Win-Win partnerships Title of presentation and date

  5. Electricity market shares by consumption (GWh) – Northern Ireland Source: RETAIL MARKET MONITORING Quarterly Transparency Report AUG 2012 Title of presentation and date

  6. Market Price Drivers • Electricity – Key Price Determinants • Gas prices (NBP) • Coal prices • Pool prices • Stg/€ exchange rates (regulated charges) • Carbon price • Regulatory Charges • International events Title of presentation and date

  7. Market Price Drivers - Natural Gas Trends For October 1st 2012, the most recent measurement date, the year ahead gas price is 62.65 p/ therm). Title of presentation and date

  8. Market Price Drivers - Pool Price Price €/MWH Gasoil, HFO, etc CCGT Interconnector CHP Coal & Peat Wind & Hydro Summer Winter Size (MW) • Units stacked up in order of price – driven by Fuel • Unit that meets demand set the price • Capacity Payment charged to suppliers and awarded to generators • Fuel Price the fundamental driver – especially gas Title of presentation and date

  9. Pool Price Movements – SMP Prices Close correlation with Day Ahead Gas prices 9 Title of presentation and date Title of presentation and date

  10. Market Price Drivers – Regulatory Charges Impact depends on consumption profile Title of presentation and date

  11. Regulatory Charges – Typical HV Customer(5 GWh) Excludes CCL Title of presentation and date

  12. Procurement Strategies – Contract Options • Fixed price contracts – up to 3 yrs • Flexible contracts – partial • Flexible contracts – fully transparent • Pool Price Pass Through Title of presentation and date

  13. Procurement Strategies other than fixed price • Indexed Contracts • Pool Pass Through + Mgt Fee • Day Ahead Gas price / Heren Index • Framework Flexible Contracts • Monthly / Quarterly Lock in of prices • Monthly Partial volume lock in • Fully Flexible Contracts • Fixed Energy Charge (Conversion Charge) • £cost per MWh • Variable Energy Charge • Lock and Unlock transactions • Default gas/carbon price is Day Ahead Price • Minimum volume but can participate through Portfolio / • Basket arrangement. Title of presentation and date

  14. Summary • Wholesale energy markets (Gas) are the key market drivers of energy costs. • Company needs to agree appropriate contract option to balance the management of budget risk and cost containment. • NB to understand the benefits of Fixed / Flexible alternatives. • If Flexible – must involve all stakeholders • Clearly agreed strategy • Devolved decision making in accordance with agreed strategy • Regular performance reviews Title of presentation and date

  15. Thank you Michael Counihan Sales Manager Tel: 01 893 4417 Mob: 087 6495306 E-mail: michael.counihan@electricireland.ie Title of presentation and date