The NY PSC released an order modifying retail supplier requirements. Power and gas markets continue bearish run into winter, headroom is available in MA, and FirstEnergy Solutions restructuring hits snag.
The January 2020 NYMEX Henry Hub forward contract decreased to $2.243/MMBtu, a -$0.16 (-6.5%) decrease from the previous Wednesday. The price of the 12-month strip averaging January 2020 through December 2020 futures contracts decreased -$0.06 (-2.5%) to $2.274/MMBtu.
Natural gas prices in the Northeast ticked up week over week with cooler weather arriving at the end of the report week. Boston’s Algonquin Citygate prices climbed $0.70 (18.5%) to $4.48/MMBtu last Wednesday. Transco Zone 6 NYC prices increased $0.48 (20.3%) from $2.36/MMBtu to $2.84/MMBtu.
Pennsylvania’s Dominion South increased $0.03 (1.7%) to $1.83/MMBtu. Tennessee Zone 4 Marcellus spot prices remained the same at $1.79.
For the NYC zone (J) in NYISO, the 12 Month ATC strip decreased -$0.66 (-1.9%) to $33.35. The 24 Month ATC strip decreased -$0.43 (-1.2%) to $35.29 and the Cal 2020 ATC strip decreased -$0.48 (-1.4%) to $34.45.
For the NEMASSBOST zone in ISONE, the 12 Month ATC strip decreased -$1.01 (-2.7%) to $37.05. The 24 Month ATC strip decreased -$0.48 (-1.2%) to $38.90 and the Cal 2020 ATC strip decreased -$0.58 (-1.5%) to $38.54.
For the PEPCO zone in PJM, the 12 Month ATC strip decreased -$0.14 (-0.4%) to $32.50. The 24 Month ATC strip decreased -$0.06 (-0.2%) to $32.55 and the Cal 2020 ATC strip decreased -$0.04 (-0.1%) to $32.80.
For the Houston zone in ERCOT, the 12 Month ATC strip increased $0.04 (0.1%) to $41.44. The 24 Month ATC strip decreased -$0.27 (-0.7%) to $39.16 and the Cal 2020 ATC strip increased $0.17 (0.4%) to $41.62.
The upcoming Price to Compare for Massachusetts’ BECO, dba Eversource, Small Commercial and Industrial rate class (G1) is $0.11912/kWh, in effect for the period January 1, 2020 to June 30, 2020. This rate is a 12.7% increase from the previous rate of $0.10569/kWh for the July 1, 2019 to December 31, 2019 price period.
Headroom is now available in the BECO territory for the 6, 9 and 12 month terms, with $0.00547/kWh and $0.0054/kWh of likely headroom for the 9 and 12 month contracts, respectively.
Over the last week, the NEMASSBOST ATC 12-month strip decreased, slipping -2.7% to finish at $37.05/MWh yesterday. This time last year, the strip was trading at $51.41/MWh, which is 38.8% 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 $37.02/MWh on December 13, 2019.
For the week ending December 6, the EIA reported net withdrawals from storage of 73 Bcf, which is lower than last year’s net withdrawals of 75 Bcf for this week and higher than the 5-year (2014–18) average net injections of 68 Bcf.
Working natural gas in storage totaled 3,518 Bcf, which is 593 Bcf (20.3%) higher than last year’s working gas totals of 2,925 Bcf at the same time and 14 Bcf (-0.3%) lower than the 5-year (2014-2018) average of 3,532 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 remained constant 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 increased 6%, industrial sector consumption decreased 3%, residential-commercial consumption increased 2%, and exports to Mexico increased 2%.
US LNG exports increased week/week, with fourteen vessels departing US ports for a combined 51 Bcf.
The New York Public Service Commission (PSC) adopted a handful of new requirements for energy service companies (ESCOs) in the state last Thursday. The filing imposes restrictions on the types of products suppliers can offer to “mass market” customers, or residential and small commercial customers, as well as requiring that utilities provide comparisons between supplier rates and utility default service rates. Suppliers will be prohibited from bundling additional products, like gift cards, in their energy supply offerings. The PSC order also forces all ESCOs to reapply for retail supply eligibility within 90 days. The new compliance requirements become effective 60 days from the date of the filing.
The NY PSC’s new rules force suppliers to offer rates that fall within specific boundaries. Variable rates must be guaranteed to save the customer money compared to the utility default service rate over an annual period, and suppliers will provide credits to customers to make up the difference if the variable rate is higher. Fixed rate products must cost no more than 5% more than the utility’s average default service rate over a trailing 12 month period, and renewable energy products must contain at least 50% more renewable energy than the minimum renewable energy obligation for the load serving entity in a given compliance year.
First Energy Solutions’ (FES) reorganization resulting from bankruptcy may be further delayed after a judge for the U.S. Court of Appeals for the Sixth Circuit ruled that the bankruptcy judge must reconsider the course of FES’s power purchase contracts. Part of the company’s reorganization hinged upon the bankruptcy court declaring that FES’s power purchase agreement with Ohio Valley Electric Corporation (OVEC) was a typical contract, which would allow them to exit the agreement, but the 6th Circuit determined that the Federal Power Act and case precedent allow FERC to review such power purchase contracts. FERC will now have the chance to file objections in bankruptcy court over FES’s departure from the contract, likely lengthening the troubled company’s reorganization as Energy Harbor.
Below average temperatures are forecast for the western part of the country in the 8-14 day window starting on Christmas Eve. The Midwest and East Coast will see opposite conditions, with warmer than typical temperatures predicted east of the Rockies. The highest probabilities for warm temperature anomalies reside the Deep South from eastern Texas through Alabama.
The Atlantic coast and the Pacific Northwest will see drier than average conditions in the 8-14 day window. Wetter weather is predicted for almost everywhere else. The highest chances for greater than average precipitation are in the Southwest and Southern California and an area stretching from New Mexico northeast to Illinois and Wisconsin.