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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: December 10th, 2020  (Wk 50)

 

POWER MARKETS

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WEST Demand in California has been relatively soft, thanks to mild temperatures and the implementation of new stay-at-home orders. Meanwhile, strong hydro generation in Oregon has limited the upside in Day Ahead prices there. Since the beginning of December, Day Ahead prices in SP15 and Mid-C have aver-aged around $39/MWh and $29/MWh, respectively. In contrast, forward prices have increased as additional supply issues in Arizona and Nevada pose signifi-cant risks for next summer. Consequently, the fear premium has been priced back in and driven up prices for all of 2021 and Q3 in particular.

ERCOT  Gas prices have recovered in the front of the curve to lend addi-tional support to term prices, particularly for CY2021. This week, real-time prices have settled in the low-to-mid-$20s/MWh in all load zones save the West, where they have been clearing in the mid-$40s/MWh because of congestion in the late-night and morning-ramp hours. The ORDC adder is still minimal for the month.

EAST Load has been strong in ISO-NE as cloud cover, weak winds, and snow covering solar panels have boosted demand. RT prices have become more vol-atile than normal this week and are averaging $33.25/MWh, up by $17/MWh from last week. The DA average is also higher than last week by $9/MWh at $29.43/MWh. Over in PJM, NYISO, and MISO, prices have held steady in the mid $20s/MWh over the past few weeks.

NATURAL GAS 

The EIA reported Thursday morning that, for the week end-ing December 4, U.S. invento-ries decreased by 91 Bcf, ap-proaching the high end of the analysts’ predicted withdrawal range of 70 to 99 Bcf. Total stockpiles now stand at 3,848 Bcf, up by 8.7% from a year ago and 7.2% above the five-year average for the same week.

In combination with a spot of cold weather, the bullish storage report provided NYMEX traders enough momentum to push the 12-month strip up by double digits. As of 9:00 a.m. PT, the front-month January contract traded above Wednesday’s closing price by $0.137/MMBtu at $2.579/MMBtu. In fact, all active months through January 2023 were higher than Wednes-day’s finals. However, basis in California dropped slightly at PG&E Citygate and SoCal Bor-der to offset the NYMEX price action in the forward markets. Cash prices have retained their strength at both PG&E and SoCal Citygates thus far this month.

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WEATHER 

Temperatures will be above average in the Midwest and East over the 1-to-5-day fore-cast period. In addition, a storm may hit the East Coast early next week.

A second storm is brewing and could strike the Northeast in the 6-to-10-day forecast peri-od. Meanwhile, temperatures should be more seasonable in the rest of the U.S. at that time.

The entire U.S. can expect warm weather during the 11-to-15-day forecast period. In the Pacific Northwest, the weather should be both warm and wet.

 

FERC FULL FOR FORTHCOMING ADMINISTRATION

Now that the U.S. Senate has confirmed Mark Christie (R) to join the recently sworn-in Allison Clements (D) as Commissioners on the Federal En-ergy Regulatory Commission (FERC), the commis-sion will soon have its full complement of five Com-missioners after nearly two years of top vacancies due to various bipartisan controversies. Both new Commissioners bring a wealth of valuable insight. Ms. Clements has two decades of public and pri-vate experience in dealing with grid policy and regu-lation, including time as president of Goodgrid LLC, an energy policy and strategy consulting firm that she also founded. Before serving as Chairman of the Virginia State Corporation Commission, Mr. Christie was president of the Organization of PJM States, Inc., where he also served on the board for more than a decade.

Although FERC requires a quorum of only three Commissioners for almost any decision, the full slate is surely welcome as the body retools to carry out the energy policy of the incoming administration of President-Elect Joe Biden, especially in this un-precedented year, which has seen some shakeups at FERC. Chairman Neil Chatterjee was recently demoted in favor of Commissioner James Danly, and it is reasonable to assume that Danly’s position will last only until Biden takes office and presumably appoints either Clements or Commissioner Richard Glick, also a Democrat, to the top spot. Changes in energy policy or how FERC will operate under the new administration remain to be seen, but Christie’s addition should ultimately provide more balance, which should enable more efficient decision making as the commission tackles the long list of pending policy decisions that await.

 

 

 

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