Natural gas withdrawal season begins, renewable generation tax credits bill proposed

Net withdrawals of natural gas from storage start as winter approaches. A bill introduced in the House proposes extending current tax credits while adding new credits for renewable electricity technologies, headroom is available for Unitil MA customers, and CT proposes new supplier requirements.


General Update

  • The December 2019 NYMEX Henry Hub forward contract decreased to $2.559/MMBtu, a -$0.04 (-1.6%) decrease from the previous Wednesday. The price of the 12-month strip averaging December 2019 through November 2020 futures contracts decreased -$0.06 (-2.4%) to $2.427/MMBtu.

  • Natural gas price movements in the Northeast were mixed week over week. Boston’s Algonquin Citygate prices fell -$0.35 (-8.9%) to $3.58/MMBtu last Wednesday. Transco Zone 6 NYC prices decreased -$0.84 (-25.7%) from $3.27/MMBtu to $2.43/MMBtu.

  • Pennsylvania’s Dominion South rose $0.01 (0.5%) to $2.15/MMBtu. Tennessee Zone 4 Marcellus spot prices increased $0.02 (1.0%) to $2.07/MMBtu.

  • California prices moved up since last week. SoCal Citygate prices increased $1.66 (38.9%) to $5.93/MMBtu last Wednesday after abnormally warm temperatures. Prices at Northern California PG&E Citygate increased $0.24 (7.8%) to $3.32/MMBtu week over week.

Power

  • For the NYC zone (J) in NYISO, the 12 Month ATC strip decreased -$0.05 (-0.1%) to $36.58. The 24 Month ATC strip increased $0.11 (0.3%) to $37.41 and the Cal 2020 ATC strip increased $0.09 (0.2%) to $37.11.

  • For the NEMASSBOST zone in ISONE, the 12 Month ATC strip increased $0.34 (0.8%) to $40.35. The 24 Month ATC strip increased $0.28 (0.7%) to $41.02 and the Cal 2020 ATC strip increased $0.19 (0.5%) to $41.08.

  • For the PEPCO zone in PJM, the 12 Month ATC strip increased $0.06 (0.2%) to $35.15. The 24 Month ATC strip increased $0.14 (0.4%) to $34.33 and the Cal 2020 ATC strip decreased -$0.01 (-0.0%) to $34.63.

  • For the Houston zone in ERCOT, the 12 Month ATC strip decreased -$0.34 (-0.8%) to $42.97. The 24 Month ATC strip decreased -$0.35 (-0.9%) to $40.66 and the Cal 2020 ATC strip decreased -$0.28 (-0.6%) to $43.02.

Utility Highlight

  • The upcoming Price to Compare for Massachusetts’ Fitchburg Gas and Electric, dba Unitil, Residential rate class (D) is $0.12388/kWh, in effect from December 1, 2019 to May 31, 2020. This rate is a 24.1% increase from the current rate of $0.0998/kWh for the June 1, 2019 to November 30, 2019 price period.

  • Headroom in the Unitil territory is now available in the 9 and 12 month terms. Headroom of $0.00238/kWh and $0.00532/kWh is likely for the 9 and 12 month terms, respectively.

  • Over the last week, the WCMASS ATC 12-month strip increased, rising 0.9% to finish at $40.08/MWh yesterday. This time last year, the strip was trading at $56.50/MWh, which is 41.0% higher than this year.

  • Since the beginning of the year, the ATC strip has reached a high of $48.09/MWh on January 17, 2019 and a low of $38.28/MWh on July 5, 2019.

Natural Gas

  • For the week ending November 15, the EIA reported net withdrawals from storage of 94 Bcf, which is lower than last year’s net withdrawals of 109 Bcf for this week and higher than the 5-year (2014–18) average net injections of 32 Bcf.

  • Working natural gas in storage totaled 3,638 Bcf, which is 506 Bcf (16.2%) higher than last year’s working gas totals of 3,132 Bcf at the same time and 60 Bcf (-1.6%) lower than the 5-year (2014-2018) average of 3,698 Bcf. Total working gas is within the five-year historical range.

Supply and Demand

  • Average total supply of natural gas remained constant week/week. Dry natural gas production increased 1% while net imports with Canada decreased 17% compared with the previous week.

  • Total US consumption of natural gas decreased by 5% since last week. Consumption for power generation decreased 7%, industrial sector consumption decreased 1%, residential-commercial consumption decreased 5%, and exports to Mexico remained the same.

  • US LNG exports decreased week/week, with twelve vessels departing US ports for a combined 43 Bcf.

Market Intelligence

  • A draft bill introduced in the House of Representatives last Tuesday would extend federal investment and production tax credits and create new credits if passed. Called the Growing Renewable Energy and Efficiency Now (GREEN) Act, the bill would extend the 30% ITC for solar through 2024, as opposed to the current scheduled phase out in which the credit will decrease to 26% in 2020. The wind production tax credit of 60% would be extended through 2024 as well. Significantly, the bill establishes new ITCs for offshore wind and standalone energy storage, industries slated to grow due to expanding clean energy goals in several states. Advocates are pushing for the bill to be put into effect by year end, but it first must pass in the House and the Senate.

  • New Jersey increased its offshore wind procurement target to 7.5 GW by 2035 as a result of Governor Phil Murphy’s executive order last week. The new order gives New Jersey the second largest offshore renewable capacity goal, improving upon the state’s previous target of 3.5 GW by 2030. The announcement follows steps taken last year to develop the offshore wind industry, such as implementing an Offshore Wind Tax Credit Program and an Offshore Wind Technical Assistance Program. A solicitation last June awarded Orsted the largest offshore wind project in the U.S. at the time in the form of a 1.1 GW installation, and additional requests for proposals are planned for the next few years.

  • The Connecticut Public Utilities Regulating Authority (PURA) proposed several changes to retail electric supplier requirements in the state. Suppliers will be required to maintain an amount of security proportional to their load served in the previous calendar year, and this amount can be up to $2 million for suppliers with more than 1 million MWh of load. Additionally, supplier licenses would be reviewed every other year, in contrast to the current system in which licenses expire after five years. The proposals also include new rate disclosure and information requirements for supplier websites.


Weather

  • The 8-14 day window will bring below average temperatures to the East Coast and parts of the Midwest, with the coldest anomalies coming to the Great Lakes. Higher than average temperatures are forecast for California, the Southwest and Texas, while normal temperatures are forecast for the northern Rockies and the Pacific Northwest.

  • Drier than average conditions are forecast for the East Coast, Southeast and Texas largely due to northwesterly air flow preventing storms from developing on the eastern part of the country. Wetter than average conditions are predicted for the Southwest and West, with the highest probabilities for wet weather on the Californian coast. About normal precipitation levels are expected for the Pacific Northwest and Great Lakes regions.

© 2019 by TRUELight Energy LLC

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