Natural gas prices had a strong rally last week after bouncing off previous week’s lows, while power prices were also slightly up. ISONE reported on the average February price levels last week and highlighted that this past February they realized the lowest prices of any February on record. Two new nuclear generators are being built in Georgia while the current nuclear fleet accounts for 20% of the nation’s annual power generation. PA utility requests the PUC to shorten an upcoming default service auction due to delayed PJM capacity auctions resulting in no price transparency for forward capacity prices. The Eastern and Midwestern States are forecast to experience below normal temperatures in the middle of April.
The May 2020 NYMEX Henry Hub traded up to $1.783/MMBtu, a $0.20 (+12.4%) increase from the previous Wednesday. The price of the 12-month strip averaging May 2020 through April 2021 futures contract climbed $0.13 (+5.9%) to $2.346/MMBtu.
For the week ending April 3, 2020, the EIA reported net injection into storage of 38 Bcf, which is more than last year’s net injection of 25 Bcf for this week and higher than the 5-year (2015–19) average net injection of 6 Bcf.
Working natural gas in storage totaled 2,024 Bcf, which is 876 Bcf (76.3%) higher than last year’s working gas totals of 1,148 Bcf at the same time and 324 Bcf (19.1%) higher than the 5-year (2015-2019) average of 1,700 Bcf. Total working gas is within the five-year historical range.
Not much movement in the power markets again and slight move higher early this week after a shortened trading period last week heading into the holiday weekend. Forward pricing moved higher but hourly clearing prices in all the ISO markets continued to clear at very low levels due to lower realized demand and ISO’s continuing to over forecast demand in the day-ahead markets. Customers on index based products continue to perform very well and expect to see this trend to continue heading into the summer demand season.
In ISO New England, the MassHub 12 Month peak strip moved up (1.27%) to $35.97 and 24 Month peak strip was only up $0.30 week over week to end at $37.12. The NYISO NYC Zone (J) 12 Month peak strip increased (2.4%) to $35.01 with summer 2020 peak still staying below the $30 at $29.89. In the PJM market, same old story and not much movement during the lead up to the holiday weekend and early this week. The West Hub 12 Month peak strip was up $0.70 to end at $31.02 and 24 month peak strip up $0.63 to settle at $31.67 in very light trading activity.
ERCOT day-ahead forecasts have not caught up to the 5% - 10% overall demand destruction from Covid-19 and continue to print very low hourly clearing prices. Slight movements down for the ERCOT forward peak pricing strips. Houston zone 12 Month peak strip down $0.63 and the 24 Month peak strip was down slightly $0.11 week over week.
No change in overall guidance as power pricing will continue to trade in a tight range with no large breakout expected either way in the short term. The majority of the ISOs will continue to over forecast demand that will result in very low clearing prices and reduce other load serving costs over the next few months. We would still like to see risk premiums on forward curves to account for execution risk in this work from home environment. Contact TrueLight to stay on top of value in current forward curve pricing with expert hedge strategy recommendations and learn more about our portfolio management execution expertise.
Headroom in the PECO – R 112 territory is now available in the shorter periods for contracts with 3 and 6 month terms. Headroom of $0.00501/kWh and $0.00287/kWh is likely for these periods, respectively.
Duquesne Light, a Pennsylvania utility within PJM, seeks to shorten the default service contract length due to lack of known PJM capacity price. The utility petitioned the Pennsylvania Public Utility Commission to shorten the Fixed Price Full Requirements supply contract from 24 months to 12 months. Duquesne Light notes that if the supply contract is not shortened, portions of it will extend into the 2022/2023 PJM planning year, of which no capacity price has been set. No capacity price has been set as several PJM capacity price setting auctions have been delayed due to ongoing proceedings between FERC and PJM. Let TrueLight help you stay on top of all utility and market 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.
Nuclear Power plants play an important in the United States by consistently producing roughly 20% of the total annual electricity production in the United States. Some proponents consider this nuclear generation green, as there is no combustion from burning natural resources, and helps to reduce carbon emissions. In New Hampshire 61% of its in-state generation is from nuclear power, followed by South Carolina with 56% and Illinois at 54%. Illinois has 11 nuclear plants in the state, most in the nation. Recent news has two new nuclear plants with capacity of 1,100 each being built in the state of Georgia. Contact us for advice and valuation modeling on all your clean energy generation development projects.
On April 6th ISO New England reported on the demand and prices for February 2020. There were some notable and record occurrences. The real-time electricity price in February of $20.32 MWh (45% less than February 2019), was the lowest of any February since the launch of the current market structure in March 2003. The record low price was driven by lower than normal natural gas prices and lower consumer demand due to a warm month. The average February 2020 Massachusetts index natural gas price was down 45% year over year to $2.27 MMBtu. The index is a volume weighted average of Algonquin, Tennessee and Dracut gas points. The average February 2020 temperature of 34 degrees Fahrenheit was warmer by 4 degrees compared to last year. 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.
Above average temperatures are forecast for the western continental U.S. in the 8-14 day window starting April 17th. The highest probability for cool anomalies are among the Midwest, Northeast and Mid-Atlantic states. The West is expected to see above average temperatures, with the highest chances for warmth for the Northwest.