Smartest Insight | Issue 116

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.

April 21, 2023

 

Market Update:

Over the last week the May Nymex contract is relatively flat but has bounced about $0.30 off the lows from Friday ($1.95) while cal 24 and 25 are each up about $0.05 during the same time frame. If gas is going to make a climb back towards the $3 level production is going to need to come off several Bcf/Day which has yet to happen so far in 2023. For the week ending 4/14/2023 the EIA is expected to report a build of 65 Bcf which would outpace both the year-ago and five-year-averages, 47 and 41 respectively. Late last week Algonquin announced an updated maintenance schedule which would significantly reduce pipeline flows during June and July. The summer Mass Hub contracted traded up to $95/MWh, a $35/MWh move, on the news but has since settled back to the mid-70’s. This has moved both NY and PJM as well.

3 year view of the calendar strip price

Regulatory Report:

PJM Capacity Auction Delays

The coalition has asked FERC to direct PJM to re-evaluate its performance assessment intervals and recalculate penalties. It also wants FERC to use its authority under Section 309 of the Federal Power Act to eliminate any performance assessment intervals in which PJM is found to be in violation of its tariff. Furthermore, FERC should direct PJM to stop invoicing nonperformance penalties until the corrections are made, and PJM should refund any overcharges for improperly assessed penalties. One gas-fired generator has already filed for Chapter 11 bankruptcy in response to $39m in penalties tied to the December 2022 storm, and several others have asked FERC to provide some form of relief.

West Virginia considering Pleasants bailout

West Virginia’s Public Service Commission is holding hearings to decide whether to impose a temporary surcharge on FirstEnergy’s utility customers to keep the 1,300-MW Pleasants coal-fired power plant online beyond its scheduled May 31 shutdown. FirstEnergy’s utilities are seeking the surcharge while evaluating the potential acquisition of the plant. The temporary surcharge of around $3m per month would keep the plant operational for at least another year. FirstEnergy’s subsidiaries Monongahela Power Co. and The Potomac Edison Co. are planning to enter a letter of intent with the current owner of the plant, Energy Transition and Environmental Management, to reimburse the company for the costs of maintaining the plant. Over 200 online letters of support and protest have been filed with the PSC on the matter. The first unit at the Pleasants coal-fired power plant began operating in April 1979, and the plant is equipped with a selective catalytic reduction emissions control system.

Maryland Approves 8.5 GW Offshore Wind Goal

Maryland's General Assembly has approved the Promoting Offshore Wind Energy Resources (POWER) Act, which sets a target of 8.5 GW of offshore wind deployment by 2031. The bill, which is expected to be signed by Democratic Governor Wes Moore soon, also prioritizes the development of new transmission lines to link offshore wind generation to the grid. The Maryland Public Service Commission will be required to issue at least one tender for open-access offshore transmission facilities by July 2025 or to ask regional grid operator PJM Interconnection to do so. The legislation has been praised by the state's offshore wind sector and is seen as a game-changer for Maryland. US Wind, which is developing Maryland's first offshore wind project, called the bill "a path for the people of Maryland to reap the benefits of huge amounts of clean energy in the coming years."

Pennsylvania RGGI Participation Still Delayed

Pennsylvania will not be offering carbon dioxide allowances for sale in the next Regional Greenhouse Gas Initiative (RGGI) auction on June 7 due to ongoing litigation, marking the fourth time Pennsylvania has not participated in RGGI auctions since joining the program last July. In contrast, Virginia, which joined RGGI in January 2021 when state legislature moved to democratic control, will offer the most CO2 allowances for sale in Auction 60, representing 24% of the total RGGI allowances available in the auction. However, Governor Glenn Youngkin, a republican, is attempting to withdraw Virginia from the cap-and-trade program. North Carolina plans to join RGGI in 2024 but may face difficulties entering via regulation without legislative support, as Pennsylvania has. RGGI is a cooperative effort of 12 New England and Mid-Atlantic states to reduce CO2 emissions from the power sector, and Auction 60 will offer 22,026,639 carbon dioxide allowances for sale, with a minimum reserve price of $2.50/st in 2023.