Natural gas and power prices slid last week, as power prices were flat to down in the face of ongoing demand destruction resulting from COVID-19 protocols. PJM filed with FERC a compliance filing related to the minimum offer price rule in the capacity market. The last coal power plant in NYISO retired early. Bangor Maine utility Emera Maine is purchased by ENMAX. The South Eastern states and Texas are forecast to continue with above average temperatures through the end of March.
The April 2020 NYMEX Henry Hub traded down to $1.604/MMBtu, a $0.27 (-14.6%) decrease from the previous Wednesday. The price of the 12-month strip averaging April 2020 through March 2021 futures contracts declined $0.15 (-6.9%) to $2.083/MMBtu.
For the week ending March 13, 2020, the EIA reported net withdrawals from storage of 9 Bcf, which is higher than last year’s net withdrawals of 91 Bcf for this week and higher than the 5-year (2015–19) average net withdrawals of 63 Bcf.
Working natural gas in storage totaled 2,034 Bcf, which is 878 Bcf (76%) higher than last year’s working gas totals of 1,156 Bcf at the same time and 281 Bcf (16%) higher than the 5-year (2015-2019) average of 1,753 Bcf. Total working gas is within the five-year historical range.
Pricing across northeast trading hubs and load zones continue to follow recent trend with more down pricing days than up days. Prices trended lower again week over week and hard to remember last time we have seen monthly pricing this low, (need to adjust pricing values on all our charts), Mass Hub example provided. Pricing in NYISO and ISONE is down another 4% to 7% across the board on expected weaker demand forecasts. Calendar 2021 pricing was down, only 2% lower, but lower trend expected to continue for longer term strips. In Texas there are still pockets of hourly price volatility but majority of the forward term pricing is down week over week. Houston summer 2020 has been moving around the past few weeks and slightly down week over week. ERCOT is the one region still expected to have strong summer pricing given current reserve margins combined with low wind days.
Markets will trend lower and push to set new lows over the next few weeks as the market continue to digest short term demand forecasts. Market participants will need to monitor short to medium term customer demand forecasts. Impact stronger in the C&I sectors but for those market participants with larger residential portfolio impact may not be as strong due to the growing remote workforce. In general still a good time to buy and lock in hedges long term but just want to adjust longer term hedge levels, in the 2 -12 month range, against lower demand forecast scenarios to avoid over hedged positions. Contact TrueLight to stay on top of value in current forward curve pricing and learn more about our portfolio management execution expertise.
Headroom for the CMP GS rate class of Central Maine Power is now available in the shorter periods for contracts with 3 and 6 month terms. Headroom of $0.00010/kWh and $0.00355/kWh is likely for these periods, respectively.
The Public Utilities Commission of Maine has approved the acquisition of a utility that serves Bangor, Emera Maine, by ENMAX Corporation. The acquisition is scheduled to close this week for 1.3 billion. As part of the deal, customers will receive $8.1 million in rate credits, along with a freeze in distribution rates through October 2021. To inquire about electricity rates in Maine, or elsewhere, and be sure you are receiving the best electricity pricing, please contact TrueLight. Let TrueLight help you stay on top of current rates and subscribe to our PTC tracking and headroom reporting or use our price verification service to ensure you stay on top of all utility and market rate changes.
Throughout the United States, coal plants cotinue to retire, priced out by natural gas plants and squeezed by regulations and incentives aimed at reducing greenhouse gas emissions and transitioning to clean, renewable energy sources. In the NYISO, Somerset, New York State's last coal power plant retired early last week. The plants closure is a step towards an aggressive new law passed last year in NY, to transform the energy grid to carbon-free by 2040. Contact us for advice and valuation modeling on all your clean energy generation development projects.
Last Wednesday, PJM issued a compliance filing to FERC regarding the Minimum Offer Price Rule (MOPR) order. The filling proposed a schedule for the resumption of PJMs capacity auctions. To make up for missed auctions, the grid operator proposed conducting auctions every six months instead of annually for the next three auctions. The filing provided flexibility for unit-specific review which would allow projects to advocate for lower MOPR floor prices on a case-by-case basis and lowering the overall adjusted floor prices for clean energy technologies to clear future bid auctions. Contact TrueLight for strategic energy market support and analysis of the most up-to-date energy market news or use our price verification service to ensure the most recent market shifts are reflected in your forward price assumptions.
Below average temperatures are forecast for the western continental U.S. in the 8-14 day window starting March 27th. The highest probability for cool anomalies are along the West Coast and in the northern Rockies. Conversely, the East Coast and Texas are expected to see above average temperatures, with the highest chances for warmth in the South Eastern states, Florida and Texas.