Smartest Insight | Issue 159

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.

March 15, 2024


Market Update:

For week ending 3/1, the natural gas storage report showed a bearish draw of -40 Bcf.  Prompt month trading is currently at $1.69/MMBtu, down $0.19 from last week. 

Yesterday, we saw a pop in prices as CNX Resources announced to put on hold capital expenditures.  This translates to 30 Bcf/day.  Initially, the market reacted with a $0.05 increase on prompt month before the realization that the impact is minimal.

Fundamentals continue to hold as we see above average temperature forecasts across the country.  This is against the backdrop of experiencing the two warmest winters in the past 30 years back-to-back.  The question is, what will next winter look like?  With a relatively inexpensive futures market, is this the time to remove some of this risk off the table?

In 2024, coal retirements have decreased but expected to pick up in 2025.  Planned coal retirements are 2.3 GW, a 62% decrease from last year. In 2025, 10.9 GW is expected to retire.  The average age of retiring plant is 54 and about ten years older those in operation.  By the end of 2026 coal capacity generation is expected to be roughly half of its peak capacity in 2011, down to 159 GW.

Storage expectations for the week ending 3/8/2024. Estimates are for a draw of -5 bcf compared to the five-year-average of - 87 Bcf.


Regulatory Report:

SEC Mandates Climate Risk Reporting for Large Companies, Excludes Scope 3 Emissions

The SEC approved a mandate requiring large, listed entities to report climate-related risks by 2025. It won't mandate alignment with TCFD recommendations, nor scenario analysis. All disclosures will be made publicly through the SEC. Scope 1 and 2 emissions reporting is required by 2026, but Scope 3 reporting was excluded due to Republican advocacy. Environmental groups are disappointed, yet some argue existing regulations in California and the EU already require Scope 3 disclosures. Alyssa Rade of Sustain Life warns companies against complacency, emphasizing the increasing importance of climate disclosures globally. The ISSB released two standards last summer, focusing on climate impacts, with more thematic areas to come by the end of 2024. Many countries pledge to mandate aligned disclosures or ensure interoperability with ISSB standards.

Senate Committee Fast-Tracks Confirmation for Three FERC Nominees Amid Quorum Concerns

Senate Energy and Natural Resources Committee hastens confirmation process for three new Federal Energy Regulatory Commission (FERC) nominees, aiming to maintain quorum. President Biden's nominations follow the departure of former Chairman Richard Glick and Democratic Commissioner Allison Clements's decision not to seek a second term. Nominees include Democrats Judy Chang and David Rosner, along with Republican Lindsay See. The nominations signal a compromise between Senate Committee Chair Joe Manchin and the White House. Potential pushback from Republicans over the nomination of a second Democrat may arise. Former FERC Chairman Neil Chatterjee anticipates smooth confirmation if Senator Manchin remains supportive. The Interstate Natural Gas Association of America emphasizes the critical role of FERC and urges swift confirmation. The nominees are expected to face questions on gas project approvals and the Biden Administration's review of LNG exports during their hearing.

ISO New England Proposes Two-Year Delay for Capacity Auction to Implement Seasonal Markets and Address Gas Constraints

ISO New England proposes a two-year delay for Forward Capacity Auction 19 to implement prompt and seasonal power capacity markets, aligning with Analysis Group's recommendation. The delay aims to design markets for capacity commitment period 19 and address issues like gas constraints. The proposal follows a Federal Energy Regulatory Commission-approved one-year delay for market reforms. The delay allows time for capacity accreditation reforms and market constraint discussions. Stakeholder support is crucial for further delays. If approved, ISO will pause discussions to plan a combined accreditation design and focus on resource retirement components. If rejected, ISO will proceed with accreditation under the current construct, targeting implementation in February 2026.