Smartest Insight | Issue 128

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 27, 2023


Market Update:

For the week ending 7/21/2023 the EIA reported an injection of 16 Bcf compared to consensus estimates of 14 Bcf. The August contract settled sharply lower off of the news and softening cooling demand in the back half of the 15-day forecast. The August contract settled at $2.49, down $0.17 on the day. Early estimates for the week ending 7/28/2023 are for an injection of 24 Bcf. The market is looking beyond the short-term weather forecast as Thursday and Friday would be the hottest weather pattern in the last 40+ years for the lower 48. Production has hovered around the 100 Bcf/day level and the EIA is forecasting that for the balance of 2023 production will average 102 Bcf/day which will likely continue to put pressure on natural gas prices. On Tuesday, 7/25/2023, there was an explosion on the Columbia Gas Transmission pipeline in Virginia impacted the Loudoun LNG interconnect. It appears that deliveries to Cove Point have not been impacted but only firm capacity is flowing at this time which means that generators along that portion of the pipeline will likely struggle to get gas until the issue/s have been resolved. 


Regulatory Report:

Construction of the Hertel-New York Interconnection Line Approved

Hydro-Québec has received the necessary approvals to construct a cross-border transmission line that will facilitate the transfer of hydroelectric power from Canada's Quebec province to New York City. Both the Quebec government and the Canada Energy Regulator have given their consent for the construction of the Hertel-New York interconnection line, which spans 58 kilometers and will link up with the Champlain Hudson Power Express line being built in the US.

Once completed, these transmission projects will deliver 1,250 MW of hydroelectric power generated by Hydro-Québec to New York City. The anticipated commissioning date for the Hertel-New York interconnection line is May 2026, aligning with the expected completion of the Champlain Hudson Power Express line, which is being developed by Transmission Developers Inc., a subsidiary of Blackstone Inc. Hydro-Québec will be responsible for supplying the electricity that will flow through this interconnected system.

NYISO Seeking transmission Solutions to NYC Reliability Shortfall

In a continued update from last week’s newsletter, during a recent meeting with stakeholders, the New York Independent System Operator (NYISO) discussed the need to address a reliability shortfall by 2025 and the process for soliciting proposed solutions for the 446-MW deficit, which includes exploring non-generation transmission options.

The NYISO presented a statement of reliability needs, as required by their tariff, which entails sharing the statement with stakeholders and posting it on their website. The identified short-term reliability need arises from a "deficient transmission security margin" in New York City within Con Edison's Transmission District. This margin reflects the balance between power demand and the available supply from generation and transmission. The need was not previously identified due to updated power demand forecasts, influenced in part by a 2019 rule from the state Department of Environmental Conservation that reduces nitrogen oxide emissions from fossil fuel-fired peaker plants. As a result, several peaker plants are expected to become unavailable, causing concerns about the reliable supply of power in New York City.

Con Edison is the Responsible Transmission Owner responsible for developing a regulated solution for the identified reliability need in 2025. NYISO also plans to solicit market-based and other permitted solutions to address the shortfall in conjunction with Con Edison's regulated solution. The grid operator intends to post a subsequent report in October 2023 to provide updates on the received solutions and their potential impact on the reliability deficiency.

EPS proposed Greenhouse Gas regulations could force changes in gas-fired generation

Approximately 24% of the US gas-fired generation fleet would need to undergo changes in technology or capacity if the Environmental Protection Agency's (EPA) latest proposed greenhouse gas regulations for power plants were to take effect today. The analysis, based on S&P Global Market Intelligence data, identifies the top owners of potentially affected gas-fired generation plants and how they might comply with the regulations once finalized.

The proposed EPA regulations require larger existing gas-fired generators that run more than half the time to adopt green hydrogen blending or achieve 90% carbon capture by the next decade. While some industry trade groups have expressed concerns about the viability of these standards due to reliance on unproven technologies, major gas-fired generation owners are already exploring these technologies to comply with the proposed rules. Duke Energy is assessing the feasibility of the proposed requirements and has pursued DOE funding for carbon capture studies and a regional hydrogen hub.

The EPA's proposed emissions reduction tactics respond to a 2022 US Supreme Court decision that limited the agency's climate authority over power plants. The proposed rulemaking aims to achieve emissions reductions by phasing in technology advances over time.