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Natural gas inventories exceed 5-year average, PA introduces community solar bill

Natural gas inventories at a surplus compared to the 5-year average. PA legislators introduce a statewide community solar bill, electricity futures move up since last week, and trend of cooler weather forecasts for November continues.



General Update

  • The November 2019 NYMEX Henry Hub forward contract fell to $2.282/MMBtu, a -$0.02 (-0.9%) decrease from the previous Wednesday. The price of the 12-month strip averaging November 2019 through October 2020 futures contracts decreased -$0.03 (-1.2%) to $2.348/MMBtu.

  • Natural gas prices were mixed in the Northeast. Boston’s Algonquin Citygate prices decreased -$0.07 (-3.5%) to $1.96/MMBtu last Wednesday. Transco Zone 6 NYC prices also decreased, slipping -$0.09 (-4.4%) from $2.04/MMBtu to $1.95/MMBtu.

  • Pennsylvania’s Dominion South increased $0.03 (1.7%) to $1.85/MMBtu. Tennessee Zone 4 Marcellus spot prices decreased -$0.13 (-7.0%) to $1.74/MMBtu.

  • California prices were mixed since last week. SoCal Citygate prices rose $0.13 (4.0%) to $3.40/MMBtu last Wednesday. Prices at Northern California PG&E Citygate dropped -$0.09 (-2.8%) to $3.16/MMBtu week over week.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.74 (2.0%) to $37.49. The 24 Month ATC strip increased $0.44 (1.2%) to $37.83 and the Cal 2020 ATC strip increased $0.71 (1.9%) to $38.17.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $0.44 (1.1%) to $41.24. The 24 Month ATC strip increased $0.24 (0.6%) to $41.63 and the Cal 2020 ATC strip increased $0.54 (1.3%) to $42.13.

  • For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.86 (2.5%) to $36.17. The 24 Month ATC strip increased $0.55 (1.6%) to $35.02 and the Cal 2020 ATC strip increased $0.75 (2.2%) to $35.62.

  • For the Houston zone in ERCOT, the 12 Month ATC strip increased $1.26 (3.0%) to $43.67. The 24 Month ATC strip increased $0.65 (1.6%) to $41.23 and the Cal 2020 ATC strip increased $0.98 (2.3%) to $43.77.

Utility Highlight

  • The current Price to Compare for Rhode Island’s Narragansett Electric Company, dba National Grid, Small Commercial rate class (C06) is $0.10248/kWh, in effect for the period October 1, 2019 through March 31, 2020. This rate is a 12.5% increase from the previous rate of $0.09113/kWh for the April 1, 2019 through September 30, 2019 price period.

  • Headroom is now available in the National Grid territory for the 1, 9 and 12 month terms, with $0.00041/kWh and $0.00593/kWh of likely headroom for the 9 and 12 month contracts, respectively.

  • Over the last week, the RHODEISLAND ATC 12-month strip increased slightly, ending at $40.80/MWh yesterday. This time last year, the strip was trading at $47.27/MWh, which is 15.9% higher than this year.

  • Since the beginning of the year, the ATC strip has reached a high of $47.96/MWh on January 17, 2019 and a low of $38.12/MWh on July 5, 2019.

Natural Gas

  • For the week ending October 18, the EIA reported net injections from storage of 87 Bcf, which is higher than last year’s net injections of 62 Bcf for this week and higher than the 5-year (2014–18) average net injections of 73 Bcf.

  • Working natural gas in storage totaled 3,606 Bcf, which is 519 Bcf (16.8%) more than last year’s working gas totals of 3,087 Bcf at the same time and 28 Bcf (0.8%) more than the 5-year (2014-2018) average of 3,578 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 decreased 3% compared with the previous week.

  • Total US consumption of natural gas increased by 2% since last week. Consumption for power generation increased 2%, industrial sector consumption decreased 1%, residential-commercial consumption increased 6%, and exports to Mexico decreased 2%.

  • US LNG exports increased week/week, with eleven vessels departing US ports for a combined 41 Bcf.

Market Intelligence

  • Pennsylvania legislators introduced a community solar bill in the PA House of Representatives last week. House Bill 1970, otherwise known as the Local Solar Programs Act, would allow utilities to contract third party developers to construct and maintain solar facilities. Customers could then subscribe to their utility’s local solar program to use a portion of the solar output (up to 10%) towards their own electricity usage. The Pittsburgh area utility Duquesne Light Company voiced support for the program, a positive sign for the future of the legislation.

  • The largest proposed onshore wind farm in the US received a crucial regulatory approval last week, as the Bureau of Land Management (BLM) granted the Chokecherry and Sierra Madre Wind Project a preliminary environmental approval. The wind project has a capacity of 2,500 MW to 3,000 MW which would surpass the current largest wind farm in the US, the 1,550 MW Alta Wind Energy Center in California. Initially slated for operation in 2020, the project is on track to go online by 2026, although a potential electricity generation tax in Wyoming could threaten the project’s viability.

  • US natural gas inventories exceeded the five-year average for the first time in more than two years, reaching 3,606 Bcf as of October 18th. Record natural gas production in 2019 contributed to the first surplus relative to the five-year average since September 2017. This trend contrasts with the storage picture a year ago, when inventories were depleted and worries about shortages heading into the winter led to a gas price run-up in November 2018. However, the rapid pace of production erased that deficit and has boosted inventories since.

Weather

  • Above average temperatures are predicted for California, the Southwest, and Florida in the 8-14 day window. Cold temperature anomalies will cover the northern section of the continental U.S., with the coolest departures from average coming to the northern Great Lakes region. The cooler air will cover New England, the Mid-Atlantic, the Midwest, and parts of the Southeast.

  • The West Coast, Pacific Northwest and the Rockies will see drier than normal conditions due to a high pressure system. New England and the Mid-Atlantic will also see dry weather anomalies. Wetter than average conditions will prevail in the northern section of the country from Montana east to Michigan, as well as from Texas east to Florida and Georgia.