In Spring 2019, both Consolidated Edison (Con Ed) and National Grid utilities declared moratoriums on signing up new gas customers in the New York City area, meaning there would not be any new residential or commercial hookups for the foreseeable future.
The moratorium already had significant impacts on retail gas and power markets across the region. Two weeks after Con Ed’s announcement, a commercial real estate deal to build a 66-unit apartment building in Westchester fell apart after the developer realized the new units would not have gas hookups. The Mayor of Yonkers, Mike Spano, is concerned municipal construction plans for a new city hall, fire station, and affordable housing units will grind to a halt in the wake of the news. Even in residential sales, Berkshire Hathaway HomeServices said homes without existing gas connections are now more difficult to sell.
Why would utility companies do this? Doesn’t this decision ultimately hurt their business, energy retailers, and consumers?
The answer is simple and concerning; the large interstate pipelines that transport gas into New York are full. This paradigm could last for years given the current political resistance to expand “dirty” fossil fuel infrastructure. According to the Northeast Gas Association, from initial development to final commissioning, a new pipeline or expansion project can take three to five years to complete, if not more.
What does this mean for energy retailers trying to grow or maintain a healthy business?
If you are trying to grow your business, signing up new gas customers will not work— they simply will not exist. Instead, staying competitive requires offering more attractive prices to potential customers.
You could offer additional services to retain or attract customers, but you are more likely to achieve success by offering better prices than the competition. Genscape's Energy Management team can help.
Our Customer Pricing Model for gas and power markets helps our clients accurately track and predict their fuel costs, hone in on the perfect margin, optimize hedging strategies, shore up cash flows and much more. To learn more about our Customer Pricing Model, please click here.