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Tuesday Jul 23, 2019   
In the aftermath of the disasters as Aliso Canyon, San Bruno and the wildfires of last summer the State of California is putting into place a number of steps to make both the power grid and gas infrastructure safer. Both PG&E and SoCal Gas will be hit with a number of new mandates that have to be implemented. The cost of these new programs will have to be imbedded into any new rate designs adopted by the Public utilities Commission. Last November we got a glimpse of what these costs may do to the revenue requirement for PG&E. They posted a proposal and there was not one stone left unturned. One of the biggest impacts was the cost of transportation services on the Redwood and Baja Paths into Northern California. Based on some preliminary estimates they would imply a 100+% on ... » read more
Monday Jul 22, 2019   
The Lone Star state has seen its wind generation oscillating over the past two weeks as it goes from averaging double digits to sitting in the the 2-4 GWa range over the same time period.  Such swings keep the system operators on their toes as they have to make adjustments to the supply stack to get everything to balance within any given hour.  The saving grace to the low wind days is the fact that the Houston Shipchannel spot prices are moderate at best so the units that need to rapidly turn on for any type of ramp have less expensive gas available to them than otherwise seen in previous years.  The graph below breaks down the ERCOT daily movement when it comes to the price action in the North zone and how the wind/load deviations impact the final outcome. Figure 1 | ERCOT ... » read more
Friday Jul 19, 2019   
In our consulting practice, we spend a lot of time building models, crunching numbers, and evaluating risk for electricity generating assets. We work for project developers, project operators, investors, and C&I buyers. While the question of “value” is usually the initial focus, the conversation often shifts to risk. For C&I buyers, the treasury and finance folks want to know how an asset will perform long term; they also want to know the potential impact on quarterly cash flow and earnings. With some clients, concern about quarterly cash variability is as important as the overall value. When thinking about cash flow variability, we typically think about the following categories of risk: Volume Risk – Production volumes can vary from expectations. While this risk ... » read more
Thursday Jul 18, 2019   
The Northeast has been fortunate enough to avoid major heat spells so far this summer. While there have been a few hot flashes, storms were quick to drench the region cooling temperatures back down. However, the region is in for an awakening as temperatures are expected to climb well above normal for the end of this week. Daytime highs for the entire Northeast are forecast to break into the 90s while a few areas should hit triple digits. With the sweat inducing hot temperatures, we can only expect that people will crank up their AC’s in order to beat the heat. The additional cooling should take peak load up to its highest point so far this year. Figure 1 | WSI Maximum Temperatures in the Northeast In PJM, peak demand is expected to reach up to 153 GWs on Friday as the hottest ... » read more
Wednesday Jul 17, 2019   
When Westcoast Pipeline suffered a rupture last fall the Pacific Northwest scrambled to adjust to the loss of flows into the Sumas delivery hub from Canada. The pipe which normally flowed over 1 BCF per day into the states to feed Seattle and Portland homes with heat and electricity had gone to zero. It was an all hands on deck event to make up for the single biggest source of molecules into the area just as heating load in the region was on the climb. Northwest Pipeline immediately filled to capacity drawing all it could from the Rockies. Jackson Prairie storage inventory was taken down to near zero through the winter months. And natural gas generation in the I-5 corridor was curtailed in lieu of ResCom demand.   Figure 1 | Sumas Receipts From Canada  It truly was a ... » read more
Tuesday Jul 16, 2019   
This summer has been a little off for me as there have been several friends of mine who seem to have a cold as some point over the past couple of weeks.  The first couple of times I heard sneezing, I chalked it up to post-spring allergies as the season seems to get dragged out depending on the conditions in March and April.  Once you realize the aches and pains that go along with the 'ahchoo' moments are real and the forehead feels hot, you know that it is not allergies and some sort of cold bug is in play. Figure 1 | Ahchoo Moment - Mother Nature has a cold I bring all this up as it seems over the past few days, Mother Nature has joined the club of catching a cold as the cumulative CDD levels have shifted lower bringing the actual temperatures much closer to normal for this ... » read more
Monday Jul 15, 2019   
If you are a market participant in West Power, it is hard to not notice the fact that Palo Verde's heavy load cash index is settling over SP15 by double digits.  This makes alot of sense when you consider the Desert Southwest saw their daytime highs in the 110 to 115 degree range last week while Southern California was still holding near normal. Figure 1 | Phoenix Weather Forecast - Daily High/Low   What does not make much sense is the fact that megawatts still move from the Desert Southwest to California at a pretty good clip despite Palo Verde being over SP15 by double digits.  If you look at the figure below, the bottom two panes represent the Palo Verde and Mead transmission flows on an hourly day-ahead basis.  You can see that each is trending downward over the ... » read more
Friday Jul 12, 2019   
We’re well into summer and we know that many of our subscribers are starting to dream of the impending summer vacation. The warmth. The relaxed clothes. The feel of sand. The taste of a pool-side cocktail. And, that perfect book. But, wait, what book should you bring along? We at Energy GPS know you’re dedicated to your craft and are likely to be more relaxed and happier reading a well-written book relevant to the world of energy, trading and data analysis than one written by, say, Nora Roberts. Books about the business of energy, economics and statistics need not be dull. The following is an intentionally non-comprehensive, subjective list of books we recommend, known as the EnergyGPS Summer Energy Reads. And what about you folks who haven’t picked ... » read more
Thursday Jul 11, 2019   
New England had a hard time finding gas molecules over the last several years. The lack of fuel was largely due to continuous expansions along the Algonquin Pipeline that were associated with a high amount of planned outages. However, this year the planned outages look significantly different. While there is still the Atlantic Bridge pipeline expansion that is a work in progress, capacity restrictions appear to be less severe. The increased fuel availability has also migrated into the electricity market with lower prices keeping LMPs from seeing much upside. The compressor capacity along Algonquin reflect the shift in outages. While there are a handful of interconnections that supply can flow through further north, Stony Point represents a major artery for gas flowing into the region. » read more
Wednesday Jul 10, 2019   
The Aliso Canyon storage cavern in Southern California happens to be one of the largest and oldest facilities in the United States. When the cavern ruptured almost four years ago it set off a chain of events that has thrown the supply demand balancing in California into chaos. The California Legislature enacted a mandate ending the caverns use in normal day to day balancing of the SoCal Gas system.  Even after the site was deemed safe and reliable by the state's own engineers at the Department of Gas and Geothermal Resources (DOGGR), its use was still restricted as an asset of last resort. As a result, SoCal Gas has had a difficult time managing system pressures. Any high demand event had the risk of causing a loss of service for the Los Angeles Basin. And because of the ... » read more
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