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NYISO releases report on carbon pricing, headroom in MA National Grid territory

Power prices rise week over week. Headroom is coming in MA National Grid service area, NYISO releases carbon pricing analysis, and a new price-to-compare for NH Unitil customers.



General Update

  • The October 2019 NYMEX Henry Hub forward contract expired at $2.428/MMBtu, a -$0.07 (-3.0%) decrease from the prior Wednesday. The price of the 12-month strip averaging November 2019 through October 2020 futures contracts decreased -$0.11 (-4.4%) to $2.386/MMBtu.

  • Natural gas price movement was varied in Northeast markets. Boston’s Algonquin Citygate prices increased $0.12 (6.7%) to $1.92/MMBtu last Wednesday. Transco Zone 6 NYC prices decreased, falling -$0.12 (-7.4%) from $1.62/MMBtu to $1.50/MMBtu. However, on Friday September 27th Transco Zone 6 bottomed out at $1.08/MMBtu, the lowest price in three years, due to low demand.

  • Pennsylvania’s Dominion South decreased -$0.09 (-6.0%) to $1.42/MMBtu. Tennessee Zone 4 Marcellus spot prices decreased -$0.12 (-8.2%) to $1.34/MMBtu.

  • California price movements have been mixed since last week. SoCal Citygate prices dropped -$0.44 (-11.8%) to $3.28/MMBtu last Wednesday. Prices at Northern California PG&E Citygate increased, rising $0.06 (2.0%) to $3.08/MMBtu.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.50 (1.3%) to $37.85. The 24 Month ATC strip increased $0.36 (0.9%) to $38.25 and the Cal 2020 ATC strip increased $0.81 (2.1%) to $38.59.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $0.82 (1.9%) to $43.05. The 24 Month ATC strip increased $0.67 (1.6%) to $42.73 and the Cal 2020 ATC strip increased $0.96 (2.3%) to $42.71.

  • For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.76 (2.2%) to $35.15. The 24 Month ATC strip increased $0.66 (2.0%) to $34.43 and the Cal 2020 ATC strip increased $1.11 (3.3%) to $34.77.

  • For the Houston zone in ERCOT, the 12 Month ATC strip increased $0.09 (0.2%) to $42.76. The 24 Month ATC strip increased $0.31 (0.8%) to $40.19 and the Cal 2020 ATC strip increased $0.45 (1.1%) to $42.42.

Utility Highlight

  • The upcoming Price to Compare for Massachusetts’ Massachusetts Electric Company (MECO, dba National Grid) Residential rate class (R1) is $0.13982/kWh, in effect from November 1, 2019 to April 30, 2020. This rate is a 29.5% increase from the current rate of $0.10793/kWh for the May 1, 2019 to October 31, 2019 price period.

  • TRUELight’s expert analytics and proprietary models indicate that headroom in the National Grid territory is now available in the 1, 9 and month terms. Headroom of $0.01418/kWh and $0.02056/kWh is likely for the 9 and 12 month terms, respectively.

  • Over the last week, the NEMASSBOST ATC 12-month strip increased, rising 1.9% to finish at $43.05/MWh yesterday. This time last year, the strip was trading at $48.54/MWh, which is 12.8% higher than this year.

  • Since the beginning of the year, the ATC strip has reached a high of $48.44/MWh on January 17, 2019 and a low of $38.59/MWh on July 5, 2019.

Natural Gas

  • For the week ending September 27, the EIA reported net injections from storage of 112 Bcf, which is higher than last year’s net injections of 91 Bcf for this week and higher than the 5-year (2014–18) average net injections of 83 Bcf.

  • Working natural gas in storage totaled 3,317 Bcf, which is 465 Bcf (16.3%) more than last year’s working gas totals of 2,852 Bcf at the same time and 18 Bcf (-0.5%) lower than the 5-year (2014-2018) average of 3,335 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 increased 1% while net imports with Canada increased 6% compared with the previous week.

  • Total US consumption of natural gas increased by 2.7% since last week. Consumption for power generation remained the same week/week, industrial sector consumption increased 0.5%, residential-commercial consumption increased 14.6%, and exports to Mexico did not change.

  • US LNG exports decreased week/week, with eleven vessels departing US ports for a combined 40 Bcf.

Market Intelligence

  • The New York ISO (NYISO) released a report on the implementation of carbon pricing in its wholesale electricity market. The proposal to add the social cost of carbon, which would be determined by the state, into power generators’ market price offers would accelerate the state’s transition to 100% zero-emission energy by 2040 that was mandated by the Climate Leadership and Community Protection Act signed by Governor Andrew Cuomo in June 2019.

  • Under the carbon pricing policy, generators would pay for the social costs of the carbon dioxide emitted by their generation. The policy will thus incentivize investment in clean energy with lower carbon emissions, resulting in market efficiency savings of $280-850 million from 2022 to 2040, according to the report. With approval from NYISO stakeholders, the NYISO Board of Directors, and FERC, the carbon pricing mechanism could become effective as early as the second quarter of 2021.

  • Unitil New Hampshire filed proposed default service rates for the December 2019 through May 2020 period. For residential customers under rate class D, the fixed default service rate will be 10.33 cents/kWh, a 34% increase from the current rate of 7.714 cents/kWh. The fixed default service rate for small commercial customers (G2, OL) will increase 31% from the current rate of 6.872 cents/kWh to 8.987 cents/kWh on December 1st.

Weather

  • In the 8-14 day window the northwestern section of the country from the Pacific Northwest to the northern Great Plains will see below average temperatures. Average temperatures will prevail in California. Meanwhile, the southern part of the US and the entire East Coast should expect above average temperatures, with the highest anomalies predicted from Texas east to South Carolina.

  • Wetter than normal conditions are expected for the Pacific Northwest and most of the eastern continental US. Moisture from the Gulf of Mexico will bring above average precipitation to the East, with a chance for more precipitation from a tropical system at the back end of the 8-14 day window. The Rockies and the Southwest are expected to be drier than normal for this time of year.