Smartest Insight | Issue 161

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 28, 2024


Market Update:

Tuesday, the Apr24 natural gas contract expired as prompt month at $1.58/mmBtu, down 2.5% on the day.  As the new prompt month contract, May24 is trading at $1.72/mmBtu down 3.8% on the day.  Looking at the power strip, the back years are holding steady while the balance of CY 2024 continues to trade $3-$4/Mwh cheaper for PJM West and $10-$12/Mwh cheaper for Mass Hub.

Natural gas storage continues to build compared to last year and the 5-yr average.  As of week ending 3/15/24, we have 2,332 Bcf in storage this is 21.4% above last year and 41% above the 5-yr average.  There's a possibility of shut in pricing in the fall as storage continues to build.  For the week ending 3/22/24 storage expectation is for a draw of -30 Bcf.

Tuesday’s bridge collapse in Baltimore has sent importers and exporters scrambling to find alternative routes for their customers.  This includes coal exporters where Baltimore was the leader in coal exporting in 2023.  Shipments will need to find other ports along the eastern seaboard to distribute their cargo through.

The 8 to 14 day forecast call for normal to below normal temps for 95% of the country.  In Spring, this means temps in the 40's and 50's for city centers like Chicago, Boston, and New York City.


Regulatory Report:

House Republicans Push Pro-Oil Agenda with Energy Bills Ahead of 2024 Elections

House Republicans passed a series of energy bills during "Energy Week," emphasizing US oil and gas production priorities ahead of the 2024 elections. The bills aimed to roll back EPA regulations, including the Greenhouse Gas Reduction Fund and methane emission fees, and streamline permits for oil and gas pipelines. Although unlikely to pass the Democrat-controlled Senate, these bills signal GOP energy priorities if they gain congressional and White House control. Republicans criticized Biden's energy policies for discouraging investment and harming consumers, while Democrats highlighted record domestic energy production despite GOP opposition. The bills include repealing the Greenhouse Gas Reduction Fund and promoting streamlined water crossing permits for infrastructure projects. The GOP also aims to halt proposed changes to federal oil and gas leasing programs and prevent presidential moratoriums on hydraulic fracturing without congressional approval. Democrats condemned the GOP's efforts as a ploy to undermine clean energy investments and favor fossil fuel interests.

Tanker Collision Sparks Safety Concerns for Baltimore's Offshore Wind Hub Proposal

A tanker collision causing the Francis Scott Key Bridge to collapse in Baltimore's harbor raises concerns for a proposed offshore wind hub's safety amidst potential new regulations. The incident, linked to an electrical malfunction, highlights safety risks from increased vessel traffic, a concern mirrored in conflicts over offshore wind development. Despite a federal grant for the wind hub, safety measures prompted by the crash may affect costs and logistics. The incident's impact on maritime activities and port operations remains uncertain, pending the NTSB investigation. Coast Guard officials foresee increased safety demands due to offshore wind expansion, potentially affecting budgets. Industry reactions range from support for rescue efforts to a focus on the rebuild, while US Wind CEO Grybowski emphasized support for the rescue efforts amid the tragedy. NTSB's investigation into the vessel's safety history and management programs is underway, with President Biden pledging federal support for the bridge's restoration.

FERC Upholds Stricter Rules for Clean Energy Projects Amid Nationwide Backlog

The Federal Energy Regulatory Commission (FERC) has upheld a final rule aimed at tackling a nationwide backlog of clean energy projects, which includes stricter penalties for missed interconnection study deadlines and increased financial requirements for developers. FERC's Order 2023, issued last summer, was in response to a backlog of over 2,000 GW of proposed projects, predominantly solar, wind, and battery storage. The rule mandates a "first-ready, first-served" approach for interconnection requests and imposes harsh penalties for late withdrawals from the queue. Despite opposition from transmission providers, FERC eliminated the "reasonable efforts" standard for study extensions, deeming a penalty regime necessary to address backlogs. Penalties for missed deadlines start at $1,000/day, escalating to $2,000/day for restudy deadlines. FERC clarified timelines for responses and restudies and increased financial commitments for developers, allowing alternative forms of financial security like surety bonds. Ørsted North America received clarification on refundable deposits for projects facing regulatory barriers. Withdrawal penalties apply throughout the process, with stricter penalties for withdrawals triggering restudies. While clean energy groups advocated for transmission provider attendance at scoping meetings, FERC declined, relying on the penalty regime to ensure cooperation. FERC affirmed the requirement for publicly available heatmaps to estimate interconnection costs and rejected the inclusion of dynamic line ratings in system impact studies due to their weather dependency. Compliance deadlines were extended, allowing transmission providers to propose alternative effective dates aligned with future studies. A transition process was outlined for customers subject to new readiness requirements, permitting penalty-free withdrawals within 60 days after the effective date.