Smartest Insight | Issue 139

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.

October 19, 2023


Market Update:

For week ending October 6th, the natural gas storage expectation is 74-76 BCF.  Actual was 84 BCF.  The market responded by dropping $0.05 on the day. Over the weekend prompt month continued to drop to a low of $3.12.  Prompt month is currently flat from yesterday but down over $0.30 on the week.  An increase in NG production coupled with moderate temps across the country our helping to put a lid on prices.

Prompt month has been pretty volatile in the past couple of weeks where we've seen sharp increases the month prior and the a complete about face last week.  The attack on Israel the week prior played a role on the increases as the market digested the impacts of the attack and how it would affect gas pricing in the states.  Should the war continue with the status quo there would be minimal impact...for now.  The market is watching winter more closely and more likely to impact pricing.  The most recent winter forecasts illustrates that El Nino will be present suggesting an above normal temperature trend.

NG storage prediction for the week ending October 13, is for a build is in the 78-82 BCF range.


Regulatory Report:

Significant updates to power grid needed to support shift to renewables

To meet climate targets and ensure energy security, the International Energy Agency (IEA) reported that 80 million kilometers of electricity networks must be added or replaced globally by 2040. The shift away from fossil fuels requires significant electrification to accommodate solar, wind, electric cars, and heat pumps. The IEA's report, "Electricity Grids and Secure Energy Transitions," emphasizes the necessity for substantial changes in grid operation and regulations. It also calls for doubling annual grid investment to over $600 billion by 2030. The report identifies 1,500 GW of renewable energy projects in advanced stages, and the IEA warns that global energy progress could be at risk if electricity grids are not prepared. In a recent net-zero roadmap, the IEA projected that over 80% of emissions reductions by 2030 would come from renewables, energy efficiency improvements, methane emission reductions, and increased electrification. Additionally, G20 nations have supported a threefold increase in renewables and acknowledged the need for $4 trillion annually to accelerate the energy transition.

PJM looking to reform aspects of capacity market

PJM, a regional transmission organization, has proposed annual testing for thermal generators during summer and winter to prevent physical failures. Generators used within a month of the December 2022 winter storm showed a 25% lower forced outage rate compared to those not recently run. PJM aims to assess summer and winter capabilities through physical demonstrations each season. Additionally, PJM requested approval from FERC to establish a new stop-loss limit for underperforming capacity resources based on auction clearing prices rather than the net cost of new entry. These proposals are intended to enhance capacity market reliability and attract crucial investments.

NY PSC rejects requests from offshore wind developers

New York regulators rejected requests from offshore wind developers, including BP, Equinor, and Eversource Energy, to increase contracted offtake prices for their projects. The New York Public Service Commission (PSC) stated that adjusting contract prices outside of the competitive procurement process would not align with their long-standing policy. Approving the requests would have increased costs for utility customers, potentially raising residential bills by up to 6.7% and commercial and industrial customers' costs by up to 10.5%. The PSC expressed concerns that approving a price increase could set a precedent for future auctions, leading developers to underprice bids and seek adjustments later.