W. Edwards Deming, the father of Total Quality Management, famously stated, "Without data, you're just another person with an opinion." Deming was instrumental in using data and statistical process controls to make better business decisions. When it comes to energy markets, there is a data deficiency and a lack of price transparency for most clients. Without adequate energy market data, many energy-related decisions are made on speculation, inadequate or inaccurate information that can lead to actions taken on biases and false assumptions. Level5 is a proprietary platform built entirely in-house by 5’s industry-leading development team. For clients, it serves as a data repository, usage analysis tool, and supercharged market analysis engine. Since 5 is a data-driven company, Level5 forms the foundation of our energy advice and is at the core of our customized energy strategies. 5 firmly believes that better energy decisions are formed from better energy data.
Forward Market Data
There is a futures or forward market price for electricity and natural gas as there is for any other commodity or security. It is not uncommon for clients to think that longer-term prices are more attractive because suppliers want to provide an incentive to buy longer contract terms. The reality is that all electricity and natural gas prices are driven by current market forces of supply and demand. If the market believes that there will be more energy supplies than demand in the future, prices will decrease with contract terms lengths. Conversely, if the market believes that the demand for electricity and natural gas will exceed the available supply, prices will increase in the future. Without a platform such as Level5, it is nearly impossible for a client to know how electricity and natural gas futures are trading. Figure 1 shows how the wholesale forward price of electricity for calendar year 2025 (blue line) has traded going back to July 2016 in North Texas. That electricity for 2025 would have cost $36/MWh in July 2016, while today, that same twelve-month term of electricity is trading 54% higher at $55/MWh. The black line in Figure 1 shows how the forward price for electricity for calendar year 2026 has traded over the last eight years. This data and the insights derived from that data are critical for making informed energy decisions.
Energy market data from Level5 also helps to refute many energy purchasing myths. There is a common misperception that the spring and fall months are the best times to make energy purchases. Figure 2 shows the forward curve for electricity in New York City for calendar year 2025. Note that in 2022, the price of electricity rose throughout the spring and reached a peak price of $83/MWh in the middle of September. Similar patterns can be seen in 2023 and 2024 where market lows were in February following very mild winters. This data shows that waiting for spring and fall months to purchase electricity and natural gas is an example of decision-making based on false assumptions. The reality is that good buying opportunities can arise in any month of the year. Level5 provides transparency into those purchasing opportunities.
Client Usage Data
In addition to market data, Level5 stores electricity usage data that can often provide useful information about the operation of a client’s facility. When interval meter data is available, 5’s analysts can often see patterns that might suggest a buying strategy that leverages off-peak usage or identifies an operational anomaly in the form of a usage spike that could suggest a piece of machinery is not functioning properly. Figure 3 is an example of how this interval data is shown. In this example, demand in kW is on the y-axis, days/months of the year are on the x-axis and the time of day is on the z-axis. Level5 contains many standardized analysis charts to help us analyze a client’s usage data and identify cost savings opportunities, which could include benchmarking, demand ratchets, power factor correction, or Coincident Peak (i.e. 4CP) curtailments. In many ways, this data functions like a CT scan, where 5’s analysts can see important details behind a client’s electricity usage.
Contract Data and Details
Often, clients inquire about the details of their current electricity and natural gas contracts. All important contract information is stored for every client, which includes the following: a PDF copy of the contract, the supplier, the utility, the electricity or gas product structure, the price on the agreement, the number of accounts on the contract, the date the contract was signed, the term of the agreement, and the date the contract ends. This is a convenient resource since clients can be given access to this account information in Level5.
This is a small sample of the many features and functionalities of the Level5 platform. The bottom-line benefit to clients is that better energy decisions are made with access to accurate and actionable energy market and usage data. Frequently, once 5 is able to examine a client’s energy usage data, we can provide a unique set of insights that lead to better energy purchasing and management strategies. If you are interested in learning more, reach out to one of our Energy Advisors and ask for a demonstration of Level5 and its capabilities.