Updated: May 8, 2019
New England slated to see one of its coldest Thanksgivings on record - what to expect for electricity pricing on the forward curve. Also, learn about how Thanksgiving and Black Friday electricity trends are expected to deviate from typical peak demand patterns.
The December 2018 NYMEX contract jumped $1.28 (36.1%) to finish the week at $4.837/MMBtu.
All physical gas spot prices saw substantial increases this past week. Boston’s Algonquin Citygate prices jumped $6.40 (170.2%) to $10.16/MMBtu. Transco Zone 6 NYC increased $1.57 (44.2%) to $5.12/MMBtu.
Tennessee Zone 4 Marcellus prices increased $1.12 (33.2%) to $4.49/MMBtu. Dominion South, serving southwest Pennsylvania, increased $1.10 (33.3%) to $4.40/MMBtu. Chicago Citygate prices rose $0.93/MMBtu (25.3%) to $4.61/MMBtu.
SoCal Citygate prices increased $3.51 (70.5%), peaking at $8.49/MMBtu. A reported 6,600 Southern California customers were without power last week due to the Woolsey and Hill Fires. Northern California is also experiencing devastation from the Camp Fire, with about 23,000 PG&E electric customers and 12,000 natural gas customers without service. Prices at Northern California PG&E Citygate increased $1.28 (32%) to $5.28/MMBtu.
Near term ISONE prices turned up sharply on Monday as the cold start to winter 2018-2019 continues with New England slated to see one of its coldest Thanksgivings on record. For the NEMASSBOST zone, the 12 Month ATC strip increased $5.53 (10.4%) from last week to $58.95. The 24 Month ATC strip increased $3.27 (6.5%) to $50.43, and the Cal 2019 ATC strip increased $2.18 (4.2%) to $51.44/MWh.
Price gains also occurred in NYISO, though they were smaller in magnitude compared to those in ISONE. For the N.Y.C. zone, the 12 Month ATC strip increased $2.65 (5.6%) to $2.65. The 24 Month ATC strip increased $1.86 (4.1%) to $44.57, and the Cal 2019 ATC strip increased $1.94 (4.3%) to $45.54/MWh.
For the PSEG zone in PJM, the 12 Month ATC strip increased $1.90 (4.7%) to $40.56. The 24 Month ATC strip increased $1.31 (3.5%) to $37.55, and the Cal 2019 ATC strip increased $1.45 (3.8%) to $38.51/MWh.
For the Houston zone in ERCOT, the 12 Month ATC strip increased $1.38 (2.8) to $48.91. The 24 Month ATC strip increased $0.55 (1.3%) to $48.91, and the Cal 2019 ATC strip increased $0.77 (1.6%) to $46.67/MWh.
A review of all competitive residential markets indicates negative to minimal headroom in all areas. We will continue to monitor and highlight markets that move positive in this section. Please contact TrueLight should you need more detailed information about current default rates and headroom, or would like to receive our forecast for future default rates and headroom by market.
For the week ending November 9, the EIA reported net injections into storage of +39 Bcf, which is higher than last year’s net injections of +13 Bcf for this week and higher than the 2013-2017 average net injections of +19 Bcf.
Working natural gas stocks totaled 3,247 Bcf, which is 528 Bcf (-13.9%) lower than last year’s level and 601 Bcf (-15.6%) lower than the five year average of 3,848 Bcf.
For the January 2019 futures contract, working gas stocks continue to trade at a lower premium, with NYMEX averaging at $3.52/MMBtu which is $0.05/MMBtu higher than the spot price. Last year at this time, the January 2019 contract was $0.24/MMBtu higher than the spot price.
Supply & Demand
The EIA reported that the average total supply of natural gas went unchanged week over week, averaging 91.3 Bcf/day. Dry natural gas production increased by 1%, while net imports from Canada jumped 19%.
Total US consumption of natural gas increased 27% week/week primarily on the back of a notable rise in residential-commercial demand as cold temperatures drove increased consumption for space heating. An increase in space heating also drove up demand for gas consumption for power generation which rose 16%. Industrial demand increased by 7% while exports to Mexico dropped by 2%.
LNG exports increased week/week with, climbing 8% to a daily average of 4.3 Bcf/day.
As folks take a break from work and school to gather together for the holiday weekend, it’s no surprise that hourly electricity usage will deviate from the typical demand patterns of a normal day: peaking in the morning and later in the evening. Thanksgiving Thursday and Black Friday peak electricity demand tends to be in the late morning, as holiday meals are being prepared and people are most actively using appliances. Electricity demand on this holiday weekend also varies year to year depending on the weather. The heating degree days, a metric that measures heating demand based on outside air temperature, for Thanksgiving week 2017 were in the 15 to 20 range (about 45 to 50 degrees Fahrenheit). Thanksgiving 2018 heating degree days are projected to be 24% higher than last year, according to the National Oceanic and Atmospheric Administration, meaning especially colder temperatures and higher electricity demand.
Philadelphia Electric Company (PECO) has established new and complete Price to Compare rates for the December 1, 2018 to February 29, 2019 price period, in accordance with the new transmission rates also taking effect December 1. As previously reported, the rates proposed by PECO in late October only accounted for changes in generation; the posted updates factor in transmission as well. Residential (R, RH) rates are expected to increase 0.43% to $0.06836/kWh, while the General Service (GS) <100 kW rate is expected to increase 2% to $0.06655/kWh.
The frigid November forecast continues with below normal temperatures persisting across most of the eastern US, stretching into the eastern reaches of Texas and the Great Plains. Most of New England remains colder than normal, which will be accompanied by above normal precipitation.
The Rockies is the dividing line with the western half of the US, especially the Pacific coast in California and southern Oregon, seeing a high probability of above normal temperatures.
Drier air is contained in two pockets – the northern Rockies and the interior Midwest, with surrounding reaches seeing above normal precipitation risks.