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Electricity forwards inch up amidst early cold, new PTC rates in PPL

Electricity strip prices increase as weather forecasts trend colder. PPL releases new PTC rates, headroom is available in NH, and MA selects 800 MW project in offshore wind procurement.



General Update

  • The November 2019 NYMEX Henry Hub forward contract expired at $2.597/MMBtu, a $0.32 (14.1%) increase from the previous Wednesday. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts increased $0.15 (6.4%) to $2.498/MMBtu.

  • Natural gas prices trended downward in the Northeast. Boston’s Algonquin Citygate prices decreased -$0.06 (-3.1%) to $1.90/MMBtu last Wednesday. Transco Zone 6 NYC prices also decreased, slipping -$0.08 (-4.1%) from $1.95/MMBtu to $1.87/MMBtu.

  • Pennsylvania’s Dominion South decreased -$0.06 (-3.2%) to $1.79/MMBtu. Tennessee Zone 4 Marcellus spot prices increased $0.01 (0.6%) to $1.75/MMBtu.

  • California prices increased since last week. SoCal Citygate prices rose $0.33 (9.7%) to $3.73/MMBtu last Wednesday. Prices at Northern California PG&E Citygate increased $0.24 (7.6%) to $3.40/MMBtu week over week.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip increased $0.87 (2.3%) to $38.36. The 24 Month ATC strip increased $0.62 (1.6%) to $38.45 and the Cal 2020 ATC strip increased $0.50 (1.3%) to $38.67.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $0.87 (2.1%) to $42.11. The 24 Month ATC strip increased $0.42 (1.0%) to $42.05 and the Cal 2020 ATC strip increased $0.26 (0.6%) to $42.40.

  • For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.22 (0.6%) to $36.40. The 24 Month ATC strip increased $0.04 (0.1%) to $35.06 and the Cal 2020 ATC strip increased $0.28 (0.8%) to $35.89.

  • For the Houston zone in ERCOT, the 12 Month ATC strip increased $1.73 (4.0%) to $45.40. The 24 Month ATC strip increased $1.13 (2.8%) to $42.36 and the Cal 2020 ATC strip increased $1.39 (3.2%) to $45.16.

Utility Highlight

  • The upcoming Price to Compare for New Hampshire’s Unitil Residential rate class (D) is $0.1033 /kWh, in effect from December 1, 2019 to May 31, 2020. This rate is a 33.9% increase from the current rate of $0.07714/kWh for the June 1, 2019 to November 30, 2019 price period.

  • TRUELight’s expert analytics and proprietary models indicate that headroom in the National Grid territory is now available in the 9 and 12 month terms. Headroom of $0.00008/kWh and $0.00381/kWh is likely for the 9 and 12 month terms, respectively.

  • Over the last week, the NEWHAMPSHIRE ATC 12-month strip increased, rising 2.1% to finish at $41.73/MWh yesterday. This time last year, the strip was trading at $46.85/MWh, which is 12.3% higher than this year.

  • Since the beginning of the year, the ATC strip has reached a high of $47.91/MWh on January 17, 2019 and a low of $38.19/MWh on July 5, 2019.

Natural Gas

  • For the week ending October 25, the EIA reported net injections from storage of 89 Bcf, which is higher than last year’s net injections of 49 Bcf for this week and higher than the 5-year (2014–18) average net injections of 65 Bcf.

  • Working natural gas in storage totaled 3,695 Bcf, which is 559 Bcf (17.8%) more than last year’s working gas totals of 3,136 Bcf at the same time and 52 Bcf (1.4%) more than the 5-year (2014-2018) average of 3,643 Bcf. Total working gas is within the five-year historical range.

Supply and Demand

  • Average total supply of natural gas remained the same week/week. Dry natural gas production did not change while net imports with Canada increased 5% compared with the previous week.

  • Total US consumption of natural gas increased by 2% since last week. Consumption for power generation decreased 1%, industrial sector consumption increased 4%, residential-commercial consumption increased 6%, and exports to Mexico increased 1%.

  • US LNG exports increased week/week, with fourteen vessels departing US ports for a combined 51 Bcf.

Market Intelligence

  • Massachusetts electric distribution companies selected Mayflower Wind to provide offshore wind electricity as part of a request for proposals (RFP) for offshore wind projects. The 804 MW project is a joint venture between Shell New Energies and EDPR Offshore America, and although final costs have not yet been released the long-term electricity price will be below the required cap of $84.23/MWh. The selection of additional offshore wind capacity helps the state achieve its goal of 1,600 MW of offshore wind capacity required by the 2016 Energy Diversity Act. The winning Mayflower Wind project aims to become operational by 2025.

  • PPL Electric released new price-to-compare rates effective December 1, 2019 through May 31, 2020. Residential customers will see a slightly higher rate of 7.632 cents/kWh, a 0.6% increase from the current rate of 7.585 cents/kWh. Small commercial customers on rate GS1 and GS3 will see an increased rate of 6.360 cents/kWh, a 2.5% jump from the current rate of 6.207 cents/kWh.

  • ISO New England published its expectations in a 10-year system outlook published last week. Notably the ISO reported that it expects its net electric load to decrease annually as increasing solar generation and energy efficiency measures offset growth in consumption. To accommodate growth in distributed energy resources and behind-the-meter solar, the report cited transmission infrastructure upgrades as a priority going forward. ISO-NE also mentioned that despite being an energy constrained region with gas pipelines at full capacity, it will have adequate capacity for the next decade.

Weather

  • Warmer than average temperatures are headed for the western continental US from California east to the Rockies in the 8-14 day forecast period. California will see the warmest anomalies. Cooler than average temperatures are coming to the rest of the country east of the Rockies, with the chances for the coldest departures from average in the Great Lakes and Northeast regions.

  • Wet weather is forecast for the Atlantic seaboard, the coasts along the Gulf of Mexico, and Texas in the 8-14 day window. Most of the Midwest will experience drier than normal conditions. The driest weather will arrive west of the Rockies, specifically in northern California and Oregon.

  • Winter-like weather is coming to parts of the East Coast by the end of this week, with snow forecast for parts of northern PJM, New York, and New England Thursday and Friday. Although models are trending toward a cool November in eastern markets, the winter months of December, January and February are still forecast to be warmer than average. Truelight will continue to monitor any developments that weather forecasts will have on energy demand as temperatures drop and winter nears.