Offshore wind advances in New England, coastal heat rounds out August

CT issues offshore wind RFP and MA offshore RFP receives bids. Power prices inch upwards in the Northeast, both coasts will see heat, Eversource WMECO files new price-to-compare, and IL will see 2 GW of coal retirements.



General Update

  • The September 2019 NYMEX Henry Hub forward contract increased $0.03 (1.3%) from the previous Wednesday, reaching $2.170/MMBtu. The price of the 12-month strip averaging September 2019 through August 2020 futures contracts increased $0.01 (0.3%) to $2.329/MMBtu.

  • Northeast natural gas prices increased since last week. Boston’s Algonquin Citygate prices increased $0.10 (4.8%) to $2.19/MMBtu last Wednesday. Transco Zone 6 NYC prices rose, increasing $0.13 (6.8%) from $1.92/MMBtu to $2.05/MMBtu.

  • Pennsylvania’s Dominion South increased $0.01 (0.6%) to $1.80/MMBtu. Tennessee Zone 4 Marcellus spot prices increased $0.04 (2.4%) to $1.72/MMBtu.

  • California prices saw mixed movements since last week. SoCal Citygate prices tumbled -$0.53 (-16.7%) to $2.65/MMBtu last Wednesday. Prices at Northern California PG&E Citygate increased, rising $0.09 (3.5%) to $2.66/MMBtu.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.27 (0.7%) to $37.19.The 24 Month ATC strip increased $0.04 (0.1%) to $37.64 and the Cal 2020 ATC strip increased $0.17 (0.5%) to $37.77.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $0.32 (0.8%) to $39.48.The 24 Month ATC strip increased $0.13 (0.3%) to $40.25 and the Cal 2020 ATC strip increased $0.39 (1.0%) to $40.51.

  • For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.48 (1.5%) to $33.05.The 24 Month ATC strip increased $0.24 (0.7%) to $32.76 and the Cal 2020 ATC strip increased $0.43 (1.3%) to $32.93.

  • For the Houston zone in ERCOT, the 12 Month ATC strip decreased -$13.95 (-27.6%) to $36.68.The 24 Month ATC strip decreased -$6.65 (-15%) to $37.65 and the Cal 2020 ATC strip increased $0.89 (2.3%) to $40.37. The sharp declines in the 12 and 24 month contracts erase gains made last week due to price volatility amidst extreme heat in ERCOT.

Utility Highlight

  • The current Price to Compare for Connecticut’s Connecticut Light & Power (CLP), or Eversource, Small General Electric Service rate class (Rate 30) is approximately $0.08796/kWh, in effect from July 1, 2019 through December 31, 2019. This rate is a -19.0% decrease from the previous rate of $0.10851/kWh for the January 1, 2019 through June 30, 2019 price period.

  • Headroom is now available for the 1 and 3 month terms, with $0.00440/kWh and $0.00236/kWh of likely headroom for the 1 and 3 month terms, respectively.

  • Over the last week, the CONNECTICUT ATC 12-month strip increased slightly, climbing 0.8% to finish at $38.90/MWh yesterday. This time last year, the strip was trading at $45.84/MWh, which is approximately 17.9% higher than this year.

  • Since the beginning of the year, the ATC strip has reached a high of $47.88/MWh on January 17, 2019 and a low of $38.08/MWh on July 5, 2019.

Natural Gas

  • For the week ending August 16, the EIA reported net injections from storage of 59 Bcf, which is higher than last year’s net injections of 47 Bcf for this week and equal to the 5-year (2014–18) average net injections of 51 Bcf.

  • Working natural gas in storage totaled 2,797 Bcf, which is 369 Bcf (15.2%) more than last year’s working gas totals of 2,428 Bcf at the same time and 103 Bcf (-3.6%) lower than the 5-year (2014-2018) average of 2,900 Bcf. Total working gas is within the five-year historical range.

Supply and Demand

  • Average total supply of natural gas increased 1% week/week. Dry natural gas production remained the same while net imports with Canada increased 9% compared with the previous week.

  • Total US consumption of natural gas remained the same. Consumption for power generation decreased 1% week/week, industrial sector consumption increased 1%, residential-commercial consumption increased 2%, and exports to Mexico increased 1%.

  • US LNG exports increased week/week, with nine vessels departing US ports for a combined 32 Bcf.

Market Intelligence

  • New England continues to move forward with offshore wind development, as Connecticut issued a request for proposals (RFP) for up to 2 gigawatts (GW) of offshore wind power last week. This follows the state’s procurement of 200 megawatts (MW) in offshore wind from Deepwater Wind last summer. Just north in Massachusetts, the Bay State Wind joint offshore wind venture between Orsted and Eversource submitted proposals for 400 MW and 800 MW projects as part of the state’s second offshore wind RFP.

  • Massachusetts’ NSTAR d/b/a Eversource has filed new Basic Service rates in its WCMA Load Zone, the former Western Massachusetts Electric Company (WMECO) territory, for its Medium and Large Commercial and Industrial customer class (G-2, T-4, T-2, T-5). The new rates are effective for the period from October 1, 2019 through December 31, 2019. The fixed price option is 9.899 cents/kWh, a 9.2% increase from the current rate of 9.062 cents/kWh. For the variable price option, the October rate is 8.622 cents/kWh, the November rate is 9.694 cents/kWh, and the December rate is 11.549 cents/kWh.

  • Vistra Energy announced it is shutting down four coal plants in Illinois in the Midcontinent ISO (MISO) territory, due to changes to an Illinois Multi-Pollutant Standard (MPS) emissions rule and unfavorable coal economics. The retirements total more than 2,000 megawatts (MW). The decision comes during a time of uncertainty for electricity generation from coal, as penetration of renewable energy resources has introduced more price competition for fossil fuel and nuclear resources.

Weather

  • Warmer than average temperatures will prevail along the entirety of the East Coast. The Southwest and the West Coast will also see higher probability for hot anomalies, while chances favor cooler than average to normal temperatures in the Midwest region.

  • Precipitation is likely to be at average levels on the East Coast from Massachusetts to Virginia. Lower precipitation anomalies cover southern Texas and the Pacific Northwest. An area extending from the Southwest east to Missouri expects to see abnormally high rainfall. Due to the potential landfall of Tropical Storm Dorian, the Southeast will likely see above average precipitation.

  • With expectations favoring above average heat and below average rainfall in southern and west Texas, there is potential for high demand and volatile electricity prices in ERCOT. However, as summer winds down in Texas the region becomes less likely to experience the extreme price volatility we have seen over the past few weeks.

© 2019 by TRUELight Energy LLC

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