Smartest Insight | Issue 165

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.

April 25 , 2024


Market Update:

Natural gas prompt month is currently trading at $1.70/MMBtu marking another volatile week where prices between a $0.15 window with steep rises and drops.  This morning alone saw a $0.10 drop in a four-hour period.

In the past couple of months, the back of the electricity curve was slow to follow natural gas.  This caused heat rates to expand from 17 to 18 since mid-March.  This week they have taken a hard drop back down to 17.  In recent months there have been spec trading based on the anticipated demand growth of data centers across the country. 

Mountain Valley Pipeline has submitted a request to begin flowing for May 23rd.  The pipeline's nameplate capacity is for 2 Bcf/day and is expected to fill in a premium price point in Transco Zone 5 from W.V to VA and the Carolinas.

The Freeport terminal is positioning to begin exports of LNG after a mechanical shutdown on April 11.  The facility capacity is 2.4 Bcf/day however they are expected to remain at 0.8 Bcf/day for now.

The summer temperature outlook calls for warmer than expected temps across the country.  Now is a good time to create a plan to cover any summer on peak exposure and minimize consumption on high peak periods.

For week ending April 19 the natural gas storage expectation is for a build of 80 Bcf.  This would put storage at 2,413 Bcf.

Regulatory Report:

NYISO Plans Updates After Error in Capacity Factors

The New York Independent System Operator (NYISO) announced plans to update capacity accreditation factors (CAFs) due to an error in determining the derating factor for Zone J, New York City, for the 2024-2025 capability year. Initially deemed unfeasible before the May 2024 spot capacity market auction, NYISO will now provide updated CAFs after stakeholder concerns. However, these updates won't be ready for the May auction, with availability for the June auction uncertain. Additional parameters affected include translation factors and capacity market demand curves. Stakeholders emphasized the importance of not requiring capacity resources to perform at outdated CAFs. NYISO discovered the error during a forced outage rate analysis, subsequently reporting it to the Federal Energy Regulatory Commission and market monitoring unit Potomac Economics. The correct derating factor for Zone J is 2.89%, altering the TSL floor value to 80.4%. NYISO plans to revise Zone J's capacity requirement and enhance process controls to prevent future errors. A waiver request has been submitted to FERC to implement the revised capacity requirement. Collaboration with stakeholders will continue to assess potential updates to CAFs and downstream parameters.

Duquesne Light Proposes Default Service Plan Changes and Green Tariff Program

Duquesne Light has submitted a proposal to the Pennsylvania Public Utility Commission (PUC) for a new default service plan, covering June 1, 2025, to May 31, 2029. The plan, titled DSP X, aims to reduce rate volatility for Medium Commercial and Industrial (C&I) customers. Currently, Duquesne Light procures all default service supplies for this customer class through three-month full requirements contracts. Under the proposed changes, half of the default service load would be served under 12-month contracts, and the other half under 6-month contracts with two 3-month price periods for bidders. Additionally, there will be adjustments in supply procurement to ensure price stability. Rates for Medium C&I customers will continue to reset quarterly, with costs reconciled semi-annually. The changes are intended to enhance supplier participation and ensure successful solicitations. Notably, no alterations are proposed for Residential & Lighting and Small C&I customers. Duquesne Light also introduces a pilot for an optional Green Tariff program, allowing residential customers to match 7% of their annual consumption with carbon-free electricity sourced within Pennsylvania. The program would be administered through an auction, and administrative costs would be recovered through Rider No. 8. Participation in the Green Tariff is capped at 5,000 customers and excludes CAP customers. Additionally, Duquesne Light proposes a new EV-only Time-of-Use (TOU) supply rate for non-shopping customers, limited to 500 residential customers, with revenue mismatches addressed through existing reconciliation mechanisms. However, specifics of the Green Tariff program and proposed tariff modifications were not immediately available.

Biden Administration Launches $7 Billion Solar for All Program to Install Rooftop Panels in Low-Income Homes

The Biden administration has launched the Solar for All program, allocating $7 billion to install over 4 gigawatts of rooftop solar panels in nearly 1 million low-income and disadvantaged households across the United States. Sixty recipients have been chosen through a competitive tender process to distribute the funds, aiming to enable communities to generate their own renewable power. Grants and low-cost financing will be provided to overcome financial barriers, along with assistance for other challenges like siting and permitting. Most grants are state-level awards, with some serving Native American tribes and multi-state regions, and they can be used for various investments including rooftop and community solar projects. The initiative also emphasizes local clean energy workforce development. Funded by President Biden's Investing in America agenda, the Solar for All program is expected to create around 200,000 jobs and save overburdened households $350 million annually on electricity bills. It's anticipated to reduce 30 million metric tons of carbon dioxide emissions over five years. EPA Administrator Michael Regan highlighted the program's benefits in terms of job creation, cost savings, cleaner air, and climate change mitigation. Secretary of Energy Jennifer Granholm emphasized the importance of solar energy accessibility, while Senator Bernie Sanders hailed the program's positive impacts on the environment, consumers, and the economy.