Smartest Insight | Issue 100

Our weekly company round-up covers the key market and industry news in one place, so you don’t have to look any further to stay ahead.

December 15, 2022


Market Update:

NYMEX prompt month futures traded down sharply today on some slight moderation in the intermediate-term forecasts. The January contract was off ~$0.60/MMBtu on the day, settling at $6.35, marking the first time in the past week that we had a down day. News of a robust information request from FERC/PHMSA also weighed on the markets as expectations for an end of year return to service from Freeport faded. Consensus estimates for the tomorrow’s EIA storage report are for a draw of 55 Bcf. If estimates are correct we would sit a mere 18 Bcf deficit to the five year average. All three northeast ISO’s have released their winter readiness statements and no surprise all are forecasted meet peak winter demand. In other power news, PJM will release the results of the 2024/2025 BRA on 12/20/2022.


Chairman Glick Status:

Federal Energy Regulatory Commission (“FERC”) chairman Richard Glick’s term expires on December 31. Democratic Senator Manchin, who represents West Virginia’s coal and natural gas interests, has essentially blocked Glick’s renomination in the Senate. Georgia Senator Warnock’s victory, followed by Arizona Senator Sinema’s switch from Democrat to Independent will give democrats a 50-49 advantage, meaning that Glick could possibly be renominated in 2023 without Manchin’s support. However, Glick’s departure would mean that, at least for a while, FERC will have 2 democratic commissioners and 2 republican commissioners. The last time FERC was split along party lines, it could not agree on how to handle certain cases, resulting in certain proposals (including PJM’s proposal to eliminate MOPR) taking effect by operation of law.

RGGI CO2 Allowance Auction Results:

On December 9, 2022, the Regional Greenhouse Gas Initiative (“RGGI”) held its’ Auction 58 for CO2 allowances. The auction cleared at
$12.99/ton, down about 3.5% from the results of Auction 57, which was conducted in September 2022. Auction proceeds are distributed to participating states and used as directed by those states. Although Pennsylvania joined RGGI in July 2022, it did not participate in either Auction 57 or Auction 58 as the
Commonwealth Court issued an order prohibiting the state from implementing RGGI. Two Pennsylvania state agencies appealed that order to the state supreme court and that appeal is still pending. Because PJM dispatches a multistate region, Pennsylvania customers are certainly paying some costs associated with RGGI in their energy prices, but the state does not receive any benefits in the form of auction proceeds. RGGI is a joint cap-and-trade program committed to reducing carbon dioxide emissions from power plants in eleven states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey New York, Rhode Island, Vermont and Virginia. Power plants in RGGI states are required to purchase and retire allowances for each ton of CO2 emitted. As a result, plant owners include the cost of RGGI allowances in their energy price offers.At its current price of $12.99/ton, RGGI allowances add between $6-$7/MWh to the cost of a natural gas plant.

BOEM Issues DEIS for Sunrise Wind:

On December 12, 2022, the U.S. Bureau of Ocean Energy Management (“BOEM”) issued a Draft Environmental Impact Statement (“DEIS”) for the proposed 924 MW Sunrise Wind project to be located offshore, south of Martha’s Vineyard and east of Montauk, New York. The DEIS concludes that the project would adversely affect 47 historic properties, including historic homes, lighthouses, and farms. Issuance of the draft starts a 60day public comment period after which the BOEM will issue a final version that will either approve the project with conditions or deny the application. The project is owned by a joint venture between Eversource Energy and Ørsted Wind and has a long-term contract to sell Offshore Wind RECs (“ORECs”) to New York State.