Retail supplier Q1 earnings announcement include COVID impacts. Default service rates rise.

Natural gas prices drifted lower after a sharp move higher early last week. Power prices continued their downward march. Dominion Energy Virginia raised its projections for generation from renewables. Retail energy suppliers released Q1 earnings with comments on COVID impacts. Pepco and Delmarva resident default service rates set to increase. The Great Lakes States are forecast to see below normal temperatures in Mid-May, while Florida, Texas and the Southeast should expect above normal temperatures.

Natural Gas

  • The June 2020 NYMEX Henry Hub traded up to $1.944/MMBtu, a $0.08 (+4.0%) increase from the previous Wednesday. The price of the 12-month strip averaging June 2020 through May 2021 futures contract climbed $0.02 (+0.8%) to $2.557/MMBtu.

  • For the week ending May 1, 2020, the EIA reported net injection into storage of 109 Bcf, which is more than last year’s net injection of 96 Bcf for this week and higher than the 5-year (2015–19) average net injection of 74 Bcf. 

  • Working natural gas in storage totaled 2,319 Bcf, which is 796 Bcf (52.3%) higher than last year’s working gas totals of 1,523 Bcf at the same time and 395 Bcf (20.5%) higher than the 5-year (2015-2019) average of 1,924 Bcf.Total working gas is within the five-year historical range.

Power

  • Power prices continued to drift lower this week after a sharp move higher to start last week. Expect the short term breakouts to continue as natural gas and power pricing will be desperate to trade higher on any bullish news. Prices will stay in current ranges with higher chance to move slightly lower over time. Too early to start talking about winter 20/21 pricing but that is the term we are monitoring to see if prices hold up as we get into the summer months. Timing is everything in like and same with hedging over the next few months, stick to your layered hedging approach over time and stay on top of energy usage trends.

  • Prices for all northeast summer hubs move lower from the run up last week, Mass Hub and NYISO Zone J pricing summer pricing are down over 5% week over week with similar drops in the longer terms. The 12 and 24 month peak pricing terms are currently around $35.72 and $37.96 for Mass Hub and $35.02 and $36.87 for Zone J. PJM followed a similar pattern, with West Hub summer and surrounding load zones down 5% and the 12 and 24 month peak pricing at $30.98 and $31.97 respectively.

  • Down in the Texas ERCOT market not as much price movement last week as summer and longer term pricing were basically flat or down slightly week over week. As the state opens back up will continue to monitor summer demand forecasts as demand will not come back as strong as expected and present a scenario of higher realized summer reserve margins. 

  • No change in overall guidance as need to patience and opportunistic with your layered hedging approach and buy on the expected dips in pricing and if you need a refresh on your hedging strategy or market outlook…..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.


Utility Highlight

  • Headroom in the ISONE RI NARRAG – A16 territory is now available in the shorter periods for contracts with 3 and 6 month terms. Headroom of $0.00877/kWh and $0.01152/kWh is likely for these periods, respectively.

  • Pepco’s Residential default service rate for October ($0.06516 per kWh) will increase versus the summer rate ($0.05180 per kWh). Pepco GS rate also increased, the rate for October ($0.06216 per kWh) increased 11% versus the summer rate ($0.05585 per kWh). Let TrueLight help you stay on top of all utility and market rates and utilize 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.


Clean Energy

  • Dominion Energy Virginia’s 15-year long-term integrated resource plan (IRP) outlines a projected quadrupling of the amount offshore wind, solar, and storage capacity generation. The plan forecasts the integration of 23,700 MW of energy from those renewable sources. Specifically, the IRP includes 5,000MW of offshore wind by 2035; 16,000MW of solar by 2035 and energy storage capacity of 2,700 by 2035. Contact TrueLight Energy for renewable asset management services and project risk analysis.

Market Intelligence

  • AEP reported higher margins from competitive retail energy on their latest earning call. They disclosed that higher retail margins accounted for a year over year improvement of over $10 million or $0.02 per share in operating earnings.

  • Spark Energy’s 10-Q commented on COVID, with notes about halting door to door sales and dividend payments that could be at risk, "Although the Company ceased door-to-door sales activities and is closely monitoring bad debt as a result of the COVID-19 pandemic, for the first quarter of 2020, the Company had no material impact to its business, financial condition or results of operations"; "Due to the COVID-19 pandemic, we may have liquidity needs that would prevent us from continuing our historical practice as it relates to the payment of dividends”. 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.

Weather

  • Above average temperatures are forecast for the Mid-Atlantic and Southeastern states as well as Texas in the 8-14 day window starting May 15th.

  • The highest probability for cool anomalies are still among the Great Lakes states. The Florida and neighboring states have the highest chances for above normal warmth as we get closer to the summer demand season.

© 2019 by TRUELight Energy LLC

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