Natural gas prices volatile, new PTCs in PECO and Maine

Natural gas prices were volatile amidst cold in the Northeast and a force majeure in the Marcellus shale basin. PECO and Maine utilities post new PTC rates, cooler weather forecasted in the West, and Gov. Cuomo threatens to revoke National Grid's gas license in NYC and Long Island.


General Update

  • The December 2019 NYMEX Henry Hub forward contract decreased to $2.600/MMBtu, a -$0.23 (-8.1%) decrease from the previous Wednesday. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts decreased -$0.08 (-3.1%) to $2.487/MMBtu.

  • Natural gas prices in the Northeast were volatile week over week. Boston’s Algonquin Citygate prices rose $0.85 (27.6%) to $3.93/MMBtu last Wednesday. Transco Zone 6 NYC prices increased $0.57 (21.1%) from $2.70/MMBtu to $3.27/MMBtu.

  • Pennsylvania’s Dominion South fell -$0.32 (-13.0%) to $2.14/MMBtu. Tennessee Zone 4 Marcellus spot prices decreased -$0.37 (-15.3%) to $2.05/MMBtu.

  • California prices were mixed since last week. SoCal Citygate prices increased $0.79 (22.7%) to $4.27/MMBtu last Wednesday. Prices at Northern California PG&E Citygate decreased -$0.36 (-10.5%) to $3.08/MMBtu week over week.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip decreased -$0.16 (-0.4%) to $36.63. The 24 Month ATC strip decreased -$0.21 (-0.6%) to $37.30 and the Cal 2020 ATC strip decreased -$0.14 (-0.4%) to $37.02.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip decreased -$0.56 (-1.4%) to $40.01. The 24 Month ATC strip decreased -$0.44 (-1.1%) to $40.74 and the Cal 2020 ATC strip decreased -$0.35 (-0.8%) to $40.89.

  • For the PEPCO zone in PJM, the 12 Month ATC strip decreased -$0.32 (-0.9%) to $35.09. The 24 Month ATC strip decreased -$0.28 (-0.8%) to $34.19 and the Cal 2020 ATC strip decreased -$0.16 (-0.5%) to $34.64.

  • For the Houston zone in ERCOT, the 12 Month ATC strip decreased -$1.54 (-3.4%) to $43.31. The 24 Month ATC strip decreased -$1.02 (-2.4%) to $41.02 and the Cal 2020 ATC strip decreased -$0.99 (-2.2%) to $43.30.

Utility Highlight

  • The current Price to Compare for Massachusetts’ Massachusetts Electric Company, dba National Grid, Residential rate class (R1) is $0.13957/kWh, in effect from November 1, 2019 to April 30, 2020. This rate is a 29% increase from the previous rate of $0.10793/kWh for the May 1, 2019 to October 31, 2019 price period.

  • Headroom in the MECO territory is now available in the 1, 6, 9 and 12 month terms. Headroom of $0.01921/kWh and $0.02172/kWh is likely for the 9 and 12 month terms, respectively.

  • Over the last week, the NEMASSBOST ATC 12-month strip decreased, dropping -1.4% to finish at $40.01/MWh yesterday. This time last year, the strip was trading at $53.97/MWh, which is 34.9% 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 November 8, the EIA reported net injections into storage of 3 Bcf, which is lower than last year’s net injections of 42 Bcf for this week and higher than the 5-year (2014–18) average net injections of 30 Bcf.

  • Working natural gas in storage totaled 3,732 Bcf, which is 491 Bcf (15.1%) more than last year’s working gas totals of 3,241 Bcf at the same time and 2 Bcf (0.0%) more than the 5-year (2014-2018) average of 3,730 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 did not change while net imports with Canada increased 19% compared with the previous week, largely due to imports into the Iroquois pipeline in upstate New York.

  • Total US consumption of natural gas increased by 10% since last week, reaching a record high of 126 Bcf/day on Tuesday, 11/12. Consumption for power generation increased 6%, industrial sector consumption increased 3%, residential-commercial consumption increased 20%, and exports to Mexico remained the same.

  • US LNG exports increased week/week, with thirteen vessels departing US ports for a combined 47 Bcf.

Market Intelligence

  • New York Governor Andrew Cuomo informed National Grid that it will rescind the company’s certificate to operate its natural gas business in New York City and Long Island in two weeks time. Cuomo justified his revocation of National Grid’s gas license in a letter to National Grid leadership, citing the company’s inability to provide reliable service due to inadequate gas supply planning. In May, National Grid declared a moratorium on new natural gas service applications due to a lack of capacity, but Cuomo asserted that the utility was naïve to depend largely on a single pipeline proposal to satisfy its future capacity needs. If the revocation of National Grid’s gas license moves forward, the utility will lose its ability to serve 1.8 million customers in downstate New York.

  • PECO has filed new price to compare rates effective for the three month period beginning December 1, 2019. The residential rate will be 6.737 cents/kWh, a -1.4% decrease from the current rate of 6.832 cents/kWh. The General Service (GS) rate for small commercial customers will be 6.446 cents/kWh, a slight -0.5% decrease from the current rate of 6.481 cents/kWh.

  • The Maine PUC has posted new price to compare rates for residential and small commercial customers effective from January 1, 2020 through December 31, 2020. For residential and small commercial customers in the Emera Maine Bangor Hydro District (formerly BHE), the new fixed rate is 6.8785 cents/kWh, a -17.8% decrease from the current rate of 8.3695 cents/kWh. For residential and small commercial customers served by Central Maine Power, the new fixed rate is 7.3037 cents/kWh, an -18.9% decrease from the current rate of 9.0029 cents/kWh.


Weather

  • California is expected to see warmer temperatures for the first portion of the 8-14 day window, with cooler temperatures following for the second half. Colder than average temps will blanket the rest of the West, with chances for the coldest anomalies in the upper Rockies. About average temperatures are expected for areas around the Mississippi River, warmer than average temperatures are headed for the East Coast from the Mid-Atlantic southward, and average temperatures are expected for the Northeast.

  • Storms in the center of the country will bring elevated precipitation from the Rockies east to the Mississippi River at the start of the 8-14 day window. The entire East Coast will also see above average precipitation. California will experience about average conditions, and Texas is the lone region expected to be drier than normal.

© 2019 by TRUELight Energy LLC

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