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Wednesday Mar 6, 2019   
It is hard to believe that over a year ago, the ERCOT grid was losing a pretty big sector of its coal fleet while colder temperatures ran rampant during the month of January and early February 2018.  This led to the cash market volatility as well as the big push upward on the summer implied heat rate curve as many did not know what was going to happen.  As we moved through the summer months, all hands were on deck helping keep the market well supplied as temperatures were above normal and driving the ERCOT load higher.  We saw some price spikes but nothing like the expectations of what was going to happen back in later winter/early spring.  This was due to the fact that Mother Nature delivered the ERCOT footprint with plenty of wind powered generation.  In fact ... » read more
Tuesday Mar 5, 2019   
After experiencing very warm weather last summer the Lower 48 storage complex only accumulated 3.2 TCF of in ground supply. That deficit was highlighted by the EIA South Central region which was entering into the heating season at a 5 year low of only 949 BCF. That was almost 400 BCF below full causing concerns that the region would suffer from a shortfall in supply if it experienced a colder than normal winter. It didn’t take long for the Gulf to get its first below normal shot of the year and the market reacted by running the prompt contract from $3.18 to $4.84 in a matter of two weeks. The price reaction caught the whole market off guard. Economics took over forcing the coal generation across the country to re-enter the dispatch stack shaving almost 3 BCF from the balancing. This ... » read more
Monday Mar 4, 2019   
As far back as I can remember in my energy career, there is always a time within a given month, quarter or year where the words 'The Might Midc' roll off my tongue or is heard in the market.  This past week, as we started a new month (March 2019), the words rang loud and clear across many trading desks as the supply/demand components were aligned for the Midc power markets to move up to the top of the stack.  When this occurs, the main objective is to be on the right side of it or get out of the way knowing that the sky is the limit.   Prior to the start of the March, Mother Nature locked in colder weather from Alberta to the Pacific Northwest via British Columbia. This weather pattern has had a strong hold on the Rescom demand in all three regions, which does not ... » read more
Friday Mar 1, 2019   
For ERCOT, the tight summer 2018 market conditions that lead to significant price spikes and market volatility are projected to be even tighter for summer 2019. ERCOT publishes, on a bi-annual basis, a Capacity, Demand, and Reserves Report (CDR). This report covers ERCOT’s expectations on load growth, existing and planned capacity, as well as calculations for future planning reserve margins (percentage of Total Resource MW above the Firm Load Forecast). The most recent CDR, which came out December 2018, presented an assessment of the projected market conditions for the summer 2019 season. As shown in Figure 1, the planning reserve margin is projected to be at an all-time low of 8.1% for summer 2019. The previous CDR published May 2018 showed a planning reserve margin of 11.0% for ... » read more
Thursday Feb 28, 2019   
New England has fared surprisingly well this year weathering the cold storms without much trouble. This is in stark comparison to last year with oil generation having to replace the majority of gas units during the Polar Vortex in January 2018. While it appeared almost like a pipeline expansion with the gas stack still running strong, an influx of LNG came as a pleasant surprise. The additional gas supply bypassed southern constraints along the Algonquin Pipeline compensating for increased rescom and power burn demand throughout the region. In order to better understand the natural gas situation in New England, let’s first take a look at the pipeline constraints. Stony Point compressor is a main bottleneck point for cheap Marcellus sourced gas during high demand periods. However ... » read more
Wednesday Feb 27, 2019   
If you live in Western Canada, I am not sure you know what warm weather feels like as Mother Nature has locked nothing but purple coloration when it comes to the heating degree days (HDD) delta from what is considered a normal winter.  Moving down into the Lower 48, the Pacific Northwest has seen its fair share of below normal temperatures throughout the month of February to a point that Tuesday's high was 37 degrees in Portland, OR.  Just a couple of hours south, the City of Eugene is blanketed with snow that does not melt as the drop in temperatures only make the roads more dangerous. Figure 1 | Eugene, OR latest Snowfall If you migrate over the Rockies and head over to the Upper Midwest, you will see that Mother Nature has no mercy when it comes to the snowfall that has been ... » read more
Tuesday Feb 26, 2019   
Over the past couple of years, the Alberta market has fallen ill to expanding production and system maintenance that restricted excess gas from going into storage.  As a result, the AECO cash basis market has been kept to a minus $1.60 USD discount to the benchmark Henry Hub index.  This was expected to continue on into Q1 of 2019 as NGTL posted their outage schedule back in November 2018 that took all the steam out of the futures curve.  With the expectation of network transportation and export capabilities being restricted, the market assumed that the supply would overwhelm the demand forcing more shut-ins in order to balance.  It was not much of a surprise when the futures value was basically cut in half (from $2.01 to $1.06) on this news. Since that time, the ... » read more
Monday Feb 25, 2019   
This past couple of weeks have seen their fair share of critical notices from almost every natural gas pipeline in the western region.  For example Northwest Pipeline sent out a notice describing how Jackson Prairie's compressor issue would hinder withdrawal capabilities at its current level (at the time it was just north of 10 BCF).  The second part of the notice stated that once the facility hit the 8.5 BCF level the withdrawal capacity would ratchet down t .200 BCF/d.   Figure 1 | Northwest Pipeline - Critical Notice tied to Jackson Prairie Compressor Issue Puget Sound Energy, operator for the Jackson Prairie storage facility, has informed Northwest that the repairs to a critical compressor unit, which was referenced in All Shipper Notice 19-029, will not ... » read more
Friday Feb 22, 2019   
In late January, FERC rejected Public Service of Colorado's (PSCO's) proposal to comprehensively reform its generation interconnection procedures.   This is a pretty big kick in the teeth to PSCO, yet the FERC order received little trade press coverage.  Although PSCO's filing was far from perfect, it enjoyed more support than opposition: no industry coalition or national-scale developer asked for rejection.  Protests and comments could be better described as "surgical" or even “helpful”. The reason to seriously consider adoption of a less-than-perfect interconnection reform proposal by a non-RTO utility is pretty simple: something needs to be done with PSCO's queue.  PSCO's total load is 8.5 GW yet its queue stands at ~24 GW, with 19 GW of that total ... » read more
Thursday Feb 21, 2019   
Massachusetts introduced a state carbon policy in 2017 to limit in state generator emissions. When we initially looked at this issue in the Northeast Mass Carbon market flash, the actual emissions from 2017 exceeded the limits set forth for 2019 and 2020 by a significant margin. The tide appears to have turned with the emissions over the course of 2018 taking a significant dive. However, what appears too good to be true usually is. While well intentioned, there were no controls put in place that would account for brown energy flowing over the transmission lines. Massachusetts appears to have asked the question, “Why kick the can down the road, when you can toss it over the fence?” Actual emission from 2018 fell dramatically with over a 2 million ton reduction in carbon ... » read more
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