PowerOptions, Hess Corporation Agreement Produces Longtime Energy Benefits for Nonprofits, Government Entities
$400 Million Natural Gas Deal to Benefit 500 Members
Boston, June 24, 2010 – More than 500 nonprofit companies and government entities will have access to lower natural gas prices and greater energy cost predictability under a $400 million agreement announced today between PowerOptions and Hess Energy Marketing, part of Hess Corporation (NYSE:HES).
The four-year contract allows members of PowerOptions, the premiere energy buying organization in the Commonwealth, to buy natural gas at reduced costs – despite having signed longer-term contracts at higher prices. The deal will allow members of PowerOptions to blend their previous higher prices with today’s unprecedented low market prices – resulting in greater predictability for members and cost savings in the near term.
The immediate cost reductions come at a time when many nonprofits and governmental entities, particularly cities and towns, are facing unprecedented budget deficits.
“Many of our members lock in prices years in advance to ensure budget predictability and to guard against market fluctuations,” said PowerOptions CEO and President Cynthia Arcate. “Locking in prices made sense in the face of rapidly escalating natural gas prices. But now that prices have plummeted, our members deserve the chance to benefit now.”
The new contract extends PowerOptions’ existing contract with Hess to October 2015 and includes the same flexible pricing options as well as a new “swing” option, which allows members to receive a discount for limiting their usage to committed amounts.
“Hess has the experience, scale and infrastructure to deliver a reliable, cost-effective supply of natural gas at very competitive prices,” said Jim Connolly, regional sales director for Hess Energy Marketing’s Northern Region. “We’re pleased to extend our relationship with PowerOptions to serve nonprofits and government entities throughout Massachusetts.”
Arcate said the contract creates a new pricing option for PowerOptions’ largest members, many of whom are now installing clean energy heating and power projects and can manage their energy usage better than in the past. This offers a benefit to Hess as the supplier and PowerOptions members should benefit from that, she said.
“This contract represents a powerful new tool for our members to monitor and control their energy usage and costs which, in the volatility of our energy markets, is an exceptional advantage we have been offering members for more than a decade,” Arcate said.
PowerOptions members spent $1.2 billion and accrued $300 million in savings over the first decade of its operation. Members now spend more than $220 million per year on energy through PowerOptions.
About PowerOptions®
The award-winning PowerOptions® was formed by HEFA in 1996 and today operates as a stand-alone nonprofit organization. It is among the largest electricity and natural gas purchasing consortiums in Massachusetts, with $220 million of annual energy commodity purchases and a combined demand of approximately 200 megawatts of electricity and 11 million dekatherms of natural gas usage. Any nonprofit or public institution in Massachusetts may become a member and participate in this collective purchasing effort. For more information, visit www.poweroptions.org.
About Hess Energy Marketing
Hess Energy Marketing, part of Hess Corporation (NYSE:HES), is the largest provider of natural gas, fuel oil and electricity to commercial and industrial customers in the 18-state market area in which it operates. The business also provides natural gas, electricity and a full range of oil products to utilities and other wholesale customers and is supported by extensive assets and regional sales and operations. For more information, please visit www.hessenergy.com