Read the original article here: Buffalo Business First
by Jacob Tierney
Reporter, Buffalo Business First
After a decade of predictable, low prices, energy costs have gone haywire.
That poses challenges for companies like EnergyMark in Williamsville — but it’s also a significant opportunity, as commercial customers look for stability in a market that’s anything but stable.
“Energy was boring for a while,” said Luke Marchiori, executive vice president at EnergyMark. “It was too quiet for too long.”
Energy service companies such as EnergyMark buy gas and electricity on the open market and sell it on to customers, an alternative to buying directly from utility companies. Utilities — such as National Fuel and National Grid — still deliver the purchased energy.
EnergyMark’s major customers include the Buffalo Bills, Catholic Health and St. Bonaventure University.
For a decade, the average price of 12-month natural gas futures hovered around $3.10 per million British thermal units. It jumped in 2021, then skyrocketed in 2022, driven by rising liquid natural gas exports and the war in Ukraine.
The average price for 2022 was $6.64.
As a result, EnergyMark’s revenue for the year will be about $180 million, roughly 80% higher than normal. There wasn’t a corresponding jump in profits, since both the company and its customers are paying more for natural gas.
“It’s not like we’re raising our margins or anything,” Marchiori said.
While utility companies sell energy on a variable rate that changes month by month, energy service companies have the option to buy and sell power at a fixed monthly rate. This allows customers to lock in a guaranteed price for months or even years, though they usually pay a small premium for the privilege.
Marchiori said the recent price spikes have brought more customers in, as a fixed rate starts to look more appealing.
“Energy costs have come to the forefront of many people’s decision making, especially large companies,” he said. “It gave us an opportunity to go to a lot of customers and say, ‘This is what can happen. This is what you can do to protect yourself.’
” On the other hand, some companies are holding off on locking in their rates. If prices come back down, they don’t want to be locked in at 2022’s high prices, Marchiori said.
The future is fuzzy, but Machiori predicts the years of $3 natural gas are in the past. He expects prices to stabilize around $5, though many factors could affect this, such as the duration of the war in Ukraine and the speed of the shift toward renewable energy sources.
“For the last ten years prices were almost too low; it was an undervalued commodity,” he said.
He hopes to see EnergyMark expand over the next few years. The company, which has 17 employees, already has a presence in Buffalo and Rochester, but it’s eyeing such markets as Albany and Syracuse.
- Jacob Tierney Reporter Buffalo Business First