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Power prices in ERCOT continue the upward trend with gains along the entirety of the forward curve

Updated: May 8, 2019

Power prices in ERCOT continue the upward trend with gains along the entirety of the forward curve, while ISONE, NYISO, and PJM trend downwards




General Update

  • Financial gas markets trade higher, with the contract for November 2018 rising $0.25 (8.4%) to $3.230/MMBtu. The 12-month strip averaging November 2018 through October 2019 futures contracts climbed $0.12 (4.3%) to finish the week at $2.931/MMBtu.

  • Physical gas spot prices were mixed. Boston’s Algonquin Citygate increased $0.37 (11.4%) to $3.60/MMBtu. Transco Zone 6 NYC increased $0.44 (15.4%) to $3.29/MMBtu.

  • Tennessee Zone 4 also increased, rising $0.22 (13%) to $1.92/MMBtu. Dominion South, serving southwest Pennsylvania, fell $0.07 (-3.2%) to $2.09/MMBtu. Chicago Citygate prices increased $0.29/MMBtu (10%) to $3.18/MMBtu, a weekly high.

  • SoCal Citygate prices increased $0.72 (19.4%) to finish at $4.42/MMBtu. Prices at Northern California PG&E Citygate increased $0.22 (6.7%) to $3.50/MMBtu.

Power

  • Following a consistent bullish push over the last several weeks, forward prices in the northeast markets took a minor slide. For the NEMASSBOST zone in ISONE, the 12 Month ATC strip decreased $0.72 (-1.5%) to $48.21.  The 24 Month ATC strip dropped $0.43 (-0.9%) to $47.07 while the Cal 2019 ATC strip dropped $0.43 (-0.9%) to $47.75/MWh.

  • For NYISO Zone J, the 12 Month ATC strip dropped $0.91 (-2.1%) to $43.15. The 24 Month ATC strip dropped $0.62 (-1.4%) to $42.52 while the Cal 2019 ATC strip dropped $0.67 (-1.6%) to $42.39/MWh.

  • Price movement in PJM also trended downwards, though price changes were smaller overall. For the PEPCO zone, the 12 Month ATC strip decreased $0.17 (-0.4%) to $40.65.  The 24 Month ATC strip decreased $0.12 (-0.3%) to $39.28, while the Cal 2019 ATC strip decreased $0.10 (-0.3%) to $39.61/MWh.

  • ERCOT continued the trend from last week as gains were observed along the entirety of the forward curve.  For the Houston zone, the 12 Month ATC strip increased $0.80 (1.9%) to $43.70.  The 24 Month ATC strip increased $0.49 (1.2%) to $40.83, while the Cal 2019 ATC strip increased $0.70 (1.7%) to $42.32/MWh.

Utility Highlight

  • There is no headroom available this week. For more information on a specific term or utility, please contact TrueLight.


Natural Gas

  • For the week ending September 28, the EIA reported net injections into storage of +98 Bcf, which is higher than last year’s net injections of +44 Bcf for the same week last year as well as the 2013-2017 average net injections of +84 Bcf.

  • Working natural gas stocks totaled 2,866 Bcf, which is 636 Bcf (-18.2%) lower than last year’s level and 607 Bcf (-17.5%) lower than the five year average for the same week.

  • For the January 2019 futures contract, working gas stocks continue to trade at a lower premium, averaging at $3.18/MMBtu which is $0.10/MMBtu higher than the spot price. Last year at this time, the January 2019 contract was $0.29/MMBtu higher than the spot price.


Supply & Demand

  • The EIA reported that the average total supply of natural gas was unchanged week/week. Dry gas production remained the same while net imports from Canada increased by 5% week/week.

  • Total U.S. consumption of natural gas fell by 1% week/week as demand for power generation dropped 6%. Consumption in both the industrial sector (+1%) and residential-commercial sector (+12%) saw gains week/week, while natural gas exports to Mexico remained unchanged from last week’s levels.

  • LNG exports were flat week/week with five LNG vessels, totaling 18.4 Bcf, departing from US ports.

Market Intelligence

  • According to recent statistics by PA Power Switch, Pennsylvania has experienced a statewide decline of 10,200 residential electric customers for the month of September. This is on par with the trend of monthly declines occurring since May 2018 for residential energy shopping, however, it is substantially less than August’s decline of about 12,000 accounts. Duquesne Light and Med-Ed were the only 2 of the 7 large PA utilities that experienced greater losses in September than in August, losing -211% (from -182 to -567) and -9.5% (from -1,363 to -1,493) more customers, respectively.

  • Fitchburg Gas & Electric, d/b/a Unitil, has filed new electric basic service rates for the price period of December 1, 2018 to May 31, 2019 with the Massachusetts DPU. The Residential (RD-1, RD-2) and Small General commercial (GD-1) fixed rates, which include a baked-in Basic Service Cost Adder (BSCA) of $0.00570/kWh, are projected to increase approximately 25% from $0.1056/kWh to $0.1310/kWh. This change is awaiting approval from the MA DPU.


Weather

  • Below normal temperatures are expected to arrive to the eastern US, replacing long-standing above normal temperatures and likely bringing the first frost of the year to most of the northern region.

  • A heavy concentration of below normal air materializes in the center of Texas, which is likely to be accompanied by neutral to above normal precipitation conditions.

  • Above normal temperatures take hold of the western region of the lower 48, with a high probability of warmer temperatures along the entire Pacific coast.  The northern half of the West region should see drier air with more normal precipitation occurring further south.