PG&E cuts power to customers to mitigate wildfire risk. Weather to turn cooler in the middle of the country, Northeast power prices slip, and headroom for Duke Energy customers in Ohio.
The November 2019 NYMEX Henry Hub forward contract fell to $2.234/MMBtu, a -$0.01 (-0.6%) decrease from the previous Wednesday. The price of the 12-month strip averaging November 2019 through October 2020 futures contracts decreased -$0.02 (-0.8%) to $2.368/MMBtu.
Natural gas price movement was varied in Northeast markets. Boston’s Algonquin Citygate prices decreased -$0.16 (-8.3%) to $1.76/MMBtu last Wednesday. Transco Zone 6 NYC prices increased, rising $0.07 (4.7%) from $1.50/MMBtu to $1.57/MMBtu.
Pennsylvania’s Dominion South decreased -$0.02 (-1.4%) to $1.40/MMBtu. Tennessee Zone 4 Marcellus spot prices increased $0.12 (9.0%) to $1.46/MMBtu.
California prices moved up since last week. SoCal Citygate prices climbed $0.30 (9.2%) to $3.58/MMBtu last Wednesday. Prices at Northern California PG&E Citygate also increased, rising $0.17 (5.5%) to $3.25/MMBtu. The price spikes come as PG&E began to shut off power to almost 800,000 electricity customers last Wednesday due to elevated wildfire risks.
For the NYC zone (J) in NYISO, the 12 Month ATC strip decreased -$0.71 (-1.9%) to $37.15. The 24 Month ATC strip decreased -$0.65 (-1.7%) to $37.61 and the Cal 2020 ATC strip decreased -$0.54 (-1.4%) to $38.05.
For the NEMASSBOST zone in ISONE, the 12 Month ATC strip decreased -$1.78 (-4.1%) to $41.27. The 24 Month ATC strip decreased -$1.10 (-2.6%) to $41.63 and the Cal 2020 ATC strip decreased -$0.88 (-2.1%) to $41.82.
For the PEPCO zone in PJM, the 12 Month ATC strip decreased -$0.02 (-0.1%) to $35.13. The 24 Month ATC strip decreased -$0.06 (-0.2%) to $34.38 and the Cal 2020 ATC strip increased $0.02 (0.1%) to $34.79.
For the Houston zone in ERCOT, the 12 Month ATC strip increased $0.67 (1.6%) to $43.43. The 24 Month ATC strip increased $0.68 (1.7%) to $40.87 and the Cal 2020 ATC strip increased $0.79 (1.9%) to $43.21.
The current Price to Compare for Ohio’s Duke Energy Secondary Distribution Service – Small rate class (DM0) is $0.05771/kWh, in effect for the period October 1, 2019 through December 31, 2019. This rate is a small decrease from the previous rate of $0.05774/kWh for the July 1, 2019 through September 30, 2019 price period.
Headroom is now available in the Duke territory for the 1, 6, 9 and 12 month terms, with $0.00207/kWh and $0.00263/kWh of likely headroom for the 9 and 12 month contracts, respectively.
Over the last week, the DEOK ATC 12-month strip did not change, ending at $32.95/MWh yesterday. This time last year, the strip was trading at $36.21/MWh, which is 9.9% higher than this year.
Since the beginning of the year, the ATC strip has reached a high of $38.69/MWh on January 17, 2019 and a low of $30.42/MWh on July 2, 2019.
For the week ending October 4, the EIA reported net injections from storage of 98 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 89 Bcf.
Working natural gas in storage totaled 3,415 Bcf, which is 472 Bcf (16%) more than last year’s working gas totals of 2,943 Bcf at the same time and 9 Bcf (-0.2%) lower than the 5-year (2014-2018) average of 3,424 Bcf. Total working gas is within the five-year historical range.
Supply and Demand
Average total supply of natural gas decreased 1% week/week. Dry natural gas production remained the same while net imports with Canada decreased 3% compared with the previous week.
Total US consumption of natural gas decreased by 3% since last week. Consumption for power generation decreased 6%, industrial sector consumption decreased 1%, residential-commercial consumption decreased 1%, and exports to Mexico did not change.
US LNG exports remained the same week/week, with eleven vessels departing US ports for a combined 41 Bcf.
US households will spend less on energy on average this upcoming winter season, according to the Energy Information Administration’s (EIA) Winter Fuels Outlook report. EIA attributes this largely to weather forecasts which predict a milder winter in general across the country. Warmer weather means lower consumption of electricity or heating fuels, in addition to lower electricity demand which drives lower prices. The rapid pace of natural gas injections to storage has bolstered gas supplies, and this is another bearish indicator for electricity prices.
Last Wednesday electric utility Pacific Gas & Electric (PG&E) shut off power to almost 800,000 customers in California in order to prevent wildfires in dry, windy conditions. Last year’s deadly Camp Fire in Northern California was caused by PG&E’s transmission lines, resulting in damages that contributed to the utility declaring bankruptcy and to new proposals to avoid disasters in the future. The blackouts last week were part of PG&E’s state-approved Public Safety Power Shutoff (PSPS) in which shutting off power to customers is intended to mitigate risks of transmission lines sparking wildfires.
The central section of the country from the Rockies east towards the Great Lakes should expect below average temperatures in the 8-14 day window. Cool anomalies extend south into Texas as well. Warm temperature anomalies are expected for both coasts, with the warmest temps expected for California and New England.
Forecasts call for above average precipitation for areas east of the Mississippi River, while areas west should expect below normal precipitation. The driest departures from average encompass a region including Northern California, southern Oregon and most of Utah.