Smartest Insight | Issue 126

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.

July 13, 2023


Market Update:

This week prompt month NG start at $2.60/MMBTU, rising to a peak of $2.74 level, only to drop down to $2.55.  So, what's behind this?  Now, that we are in the thick of summer, weather is playing a primary role in shaping energy prices.  On July 9, the NOAA updated their temp forecast showing that half of the country had a 50% or greater chance of experiencing above average temps in the 8-14 day forecast.  Overnight forecasts were adjusted to a slightly lower temps causing downward pressure on markets.  PJM balance of the month is trading $2/MWh lower on the day.

For the week ending 7/7/2023, the EIA reported an injection of 49 Bcf which was slightly lower than the consensus estimate of 52 Bcf.  This puts the storage levels 24% above last year and 14.2% above the 5-yr average.

This week, the EIA reported that NG burn is expected to increase by 4% compared to last year.  Renewable and nuclear generation is expected to increase by 6% and 2%, respectively.  This is in reaction to the waning use of coal to supply electric generation across all markets.


Regulatory Report:

Congress Revives Push to Overhaul Permitting For Energy and Infrastructure Projects

US lawmakers are renewing efforts to streamline the federal permitting process for energy and infrastructure projects before the August recess. President Joe Biden recently signed a bill to raise the US debt ceiling that included measures aimed at simplifying and expediting project development. However, lawmakers from both parties are seeking further reforms, as they believe the debt agreement did not go far enough. Senate Democrats, led by Majority Leader Chuck Schumer, will work with their Republican colleagues to advance legislation on permitting reform and other policy areas. Updating permitting laws is a priority for Congress, as the review and approval process for major energy and mining projects can take a decade or more, posing a challenge to the Biden administration's decarbonization efforts. The debt ceiling law set time limits on project reviews and expanded exemptions for some projects. Democrats want to support grid modernization and renewable energy deployment, while Republicans seek to lower barriers for oil and gas pipelines and limit judicial review of projects. The Senate Energy and Natural Resources Committee plans to hold permitting hearings in July, but specific details have not been announced. Congress faces a September 30 deadline to pass agency spending bills for the upcoming fiscal year, and time constraints may limit significant progress on permitting reforms.

PJM Interconnection Addresses Backlog of Generation Projects

PJM Interconnection LLC has launched an initiative to address a backlog of approximately 2,700 proposed generation projects seeking to connect to the power grid in the mid-Atlantic states. In response to the growing bottleneck, PJM had sought approval from the Federal Energy Regulatory Commission (FERC) in 2022 for a "first-ready, first-served" approach to interconnection requests, which was subsequently approved. The lack of transparency regarding interconnection costs has led to many developers withdrawing from the queue after learning the full cost of transmission network upgrades, causing significant delays. PJM's interconnection queue currently holds over 260,000 MW of proposed generating capacity, with the majority representing renewable energy and battery storage projects. PJM's reforms include a transition process with a special "fast lane" for projects with minimal network impact and cost responsibility for upgrades. Developers participating in the transition process have a 60-day window to fulfill readiness requirements, and PJM will begin processing fast-lane projects in September. Projects that don't qualify for the fast lane will be requeued and processed under the "first-ready, first-served" approach. PJM expects to clear thousands of MW of proposed generation through its transition plan, helping to compensate for retiring thermal generators.