The Business Energy Edge

Surge in Oil and Natural Gas Production a Plus for the Economy

Though the expansion of renewable energy is undoubtedly a boon to the U.S. economy, it’s the spike in natural gas production that’s creating additional benefits—like replacing coal-fired generation—in many parts of the country. This spike is also contributing to job growth and financial gains. In fact, $430 billion was added to the GDP in 2014 as a result of shale oil and gas growth.

Nearly 73 billion cubic feet per day of gas consumption was recorded by the U.S. Energy Information Administration in 2014, which is a 1.7% increase over 2013. Why? Cheaper natural gas is being used in greater numbers by the industrial sector and more coal plants are being retired.

According to many experts, as long as the price of natural gas stays under $6 per million Btus, natural gas expansion will continue to occur (prices currently hover around $3 per million Btus). As a result, large companies like GE and Siemens are taking advantage of the low prices and investing more heavily in natural gas generation to support manufacturing efforts.

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Big Things in Store for Small Businesses this Year

Though the U.S. economic recovery has been slow, there are promising signs on the horizon. Nearly 57% of small businesses say they expect to see an increase in revenues this year, based on a recent survey of 1,000 companies. Many are also looking to hire in 2015, with 46% planning to bring on at least six new employees.

For more insight into how small businesses are feeling about the economy, be sure to check out this great infographic that breaks it all down. For instance, did you know that 49% of companies with 51-100 employees feel the economy is in a better place than it was in 2014?

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The latest on the PJM Capacity Performance proposal

In mid-April, we told you about a proposal that PJM gave to the Federal Energy Regulatory Commission (FERC) recommending an adjustment to the compensation of electric generators. The Capacity Performance proposal is designed to increase payment to generators to incentivize performance during periods of peak demand (and increase penalties for generator non-performance).

IGS Energy, along with a number of other parties, has opposed the proposal. Unfortunately, despite the objections of many suppliers and customers, FERC approved it in a vote on Wednesday, June 10th. Though we don’t yet know the financial impact on PJM customers, we do know that beginning with the 2016-2017 and 2017-2018 planning years, a “transition” period has been approved to compensate generators before the full proposal takes effect in 2018-2019. This decision will affect everyone from commercial and industrial to residential customers.

More details regarding the costs and expected impact will come in August 2015, at which point we will provide you with more specifics. In the meantime, learn more about the filing here.

Keep a pulse on what’s happening in the energy industry. Learn more in this week’s Market Commentary.
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  • From 2008 to 2030, world energy consumption is expected to increase more than 55%
  • It takes the equivalent of 25 large power plants to power all the refrigerators in the U.S. each year
  • A compact fluorescent bulb (CFL) used 75% less energy than a traditional incandescent bulb
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