Smartest Insight | Issue 95
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 13, 2022
For the week ending 10/7/2022 the EIA reported an injection of 125 Bcf which was right in-line with analyst expectations. This marked the fourth straight week of 100+ Bcf injections which has dramatically decreased the deficit to the five-year average. End of season estimates are now at 3,550 Bcf. Price volatility has faded as of late. Yesterday’s settle marked the 15 straight trading session in which prices closed within $0.30 of $6.72. Fundamentals continue to lean bearish with national weather driven demand at near zero and production sitting near highs for the year however, Freeport LNG appears to be ontrack for a November restart as two LNG vessels are currently enroute to the facility. This could provide for some upside momentum for prices as we approach the upcoming heating season.
RGGI Auction Scheduled Without Pennsylvania
On October 11, 2022, the Regional Greenhouse Gas Initiative (“RGGI”) issued a notice that its next CO2 allowance auction will take place on December 7, 2022. The notice indicated that the state of Pennsylvania will not participate in the auction or offer allowances for sale, even though the state officially joined RGGI on July 1, 2022. On July 8, 2022, Pennsylvania’s Commonwealth Court issued an injunction prohibiting Pennsylvania’s participation in RGGI. The Court ruled that joining RGGI requires legislative approval, which has not been obtained. On July 11, 2022, the State Department of Environmental Protection (“DEP”) and the state Environmental Quality Board (EQB) appealed the decision to the supreme court and that appeal is still pending. The auction will offer 22.2 million CO2 allowances.1 CO2 allowance allows the emission of 1 ton of CO2. RGGI is a joint cap-and-trade program committed to reducing carbon dioxide emissions from power plants in eleven states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey New York, At its current price of $13.20/ton, RGGI allowances add between $6-$7/MWh to the cost of a natural gas plant.
FERC Technical Conference on Transmission Planning
On October 6, 2022 in docket AD22-8-000, the Federal Energy Regulatory Commission (“FERC”) convened a technical conference to explore measures to ensure sufficient transparency into and cost effectiveness of local and regional transmission planning decisions. In preparation for the technical conference, FERC asked the panelists to comment on the creation of an independent transmission monitor to provide oversight of transmission planning decisions and whether such a monitor could improve cost management. At the conference, state regulators and consumer advocates seemed to be supportive of the idea. Although U.S. transmission investment has been relatively small in the past 30 years, many states now have plans to spend billions of dollars on transmission upgrades.Whether or not there is a sufficient cost management focus in each state’s transmission planning process is a valid question. In most ISOs, the cost of transmission upgrades are charged to suppliers and ultimately passed onto customers.
New York Announces Phase-Out of Gasoline Vehicles
On September 29,2022, New York announced that it will eliminate the sale of new gasoline powered passenger cars and trucks by 2035. The new rules, which largely follow those recently approved in California, require that 35% of new light-duty vehicle sales be zero emission or plug in hybrids by 2026, increasing to 68% by 2030 and 100% by 2035. In 2021, the NYISO estimated that electric vehicles would add 5000 GWh/year of additional demand on
New York’s grid by 2030. If electric vehicle penetration accelerates as envisioned, it could have a bullish impact on electric prices, particularly during off-peak hours.