Natural gas remains under $3.00 per Mcf in the prompt months. The lack of demand and amount of storage is keeping prices down (currently 501 bcf above the 5-year average). The EIA (Energy Information Administration) expects NG use to have a decline of 2.4% in total for 2009 and remain flat in 2010. 

Natural Gas consumption for 2010 is expected to remain flat as well. So, what does this mean for electricity prices?

As NG prices go, so go electricity prices. This being said, we should expect to see prices remain relatively low for the remainder of the year. However, it is also important to keep an eye on economic trends that show growth...particularly in the industrial sector as they are big purchasers of NG. As the economy shows signs of recovery, the back-end of the NG curves (and subsequently electricity curves) should increase. This could mean that longer term contracts have a premium in comparison to shorter term contracts but your exposure to price increases also increases over time.

Have a great day!

Scott