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Friday Jun 8, 2018   
As an electricity market analyst I’d like to take this opportunity to thank the states of Texas and California for keeping work interesting for me (and keeping me employed). As the grid continues its long journey transitioning from thermal resources to renewables, California (What's your CCV West Power?) and Texas (ERCOT's Price Spike, The Heat is On (ERCOT Stack) are the pioneers. These unlikely renewable bedfellows have taken very different paths to this point and likely have different paths looking forward. The ERCOT renewable engine runs on a combination of abundant, cost-effective renewable resources and competitive market forces. Renewables are cheap compared to other alternatives, and forward curves support new build economics. Importantly, the renewable build out in Texas ... » read more
Thursday Jun 7, 2018   
Last week saw some of the strongest Zone A LMPs in recent memory as they jumped to $125 in the OPA for Friday June 1st. While temperatures were moderate throughout the state, multiple transmission lines throughout the Zone took planned outages. The Niagara – Robinson 230 kV line was the first to go offline on the 29th instantly congesting flows out of Niagara. The next day, two Niagara – Packard 115 kV lines took outages adding fuel to the fire. As we will see, these flows out of Niagara are important to keeping energy flowing freely. Figure 1 | Zone A 7-Day Day Ahead LMP and MCC   The issue with this particular region is that nearly all the local generation comes from the hydro facility out of Niagara. As the 345 kV steps down to smaller lines, it begins to congest as ... » read more
Wednesday Jun 6, 2018   
The beauty of both the natural gas and power markets is you have an opportunity everyday to take a position based off of technical trading and/or the market fundamentals.  Here at EnergyGPS, our focus is on the latter as we feel it gives you a good idea of what is happening on the ground while allowing you insight to what will be happening in the future.  On the natural gas side of the equation, the pendulum has swung back in favor of the basis points (hubs) as the production continues to grow in certain areas as well as LNG demand and transports constraints into the demand areas of Southern California (What is your CCV West Power?). Figure 1 | The Pendulum is Swinging We should not forget about our friends to the north AECO continues to be one of the most volatile ... » read more
Tuesday Jun 5, 2018   
Natural gas balancing has seen quite a few supply/ demand changes this year. The winter started off with a bang when the EIA posted a record draw for the first week. By the time we moved into the month of February the cash values around the country were back down below the price of coal forcing gas fired generation to adjust their dispatch. The reduced gas prices relative to stronger coal pricing forced up power burns. March and April had record heating degree days in the Plains which caused ResCom demand to jump up to all-time highs. More recently, spring has been reduced to a two week event as above normal temperatures have driven up the cooling load across the Lower 48. Most would have thought that demand side shocks like what we have experienced would lead to some price ... » read more
Monday Jun 4, 2018   
This is the time of year when various commissions come out with their assessment of the electricity and natural gas grid's ability to meet peak load for the upcoming summer.  A week ago the North American Electric Reliability Corporation (NERC) put out their 2018 Summer Reliability Assessment.  A week prior to that the Federal Energy Regulatory Commission (FERC) put out their Summer 2018 Energy Market and Reliability Assessment.  A week prior to that the California Independent System Operator (CAISO) put out their 2018 Summer Loads & Resources Assessment.  Just a couple days prior to the CAISO's report was the California Public Utilities Commission (CPUC) putting out their Aliso Canyon Risk Assessment Technical Report Summer 2018.  In general these reports ... » read more
Friday Jun 1, 2018   
While Memorial Day weekend was near perfect temperatures here in the Pacific Northwest, the same cannot be said about our neighbors in the Midwest. A heat wave swept through the Central US just in time for the holiday which made any BBQ plans significantly less comfortable. Highs reached up into the mid-90's for South Dakota and Wisconsin while parts of Minnesota triple digits. Looking at the chart below, we can see a white (pinkish) hot cloud covering a majority of the Midwest. Figure 1 | ConUS Temperature Anomaly Memorial Day 5/28/2018 Moving over to the power market, the heat had a significant impact on power loads across the MISO footprint; therefore the zonal pricing was of interest as the auction cleared. The unassuming state of Minnesota usually falls as one of ... » read more
Thursday May 31, 2018   
Earlier in the month was the first leg of the triple crown, known as the Kentucky Derby.  This traditional horse race weekend ranks right up there with the top sporting events that should be included on your bucket list of events to attend.  The weekend would be more enjoyable if you were to bet on the race itself with a trifecta bet as it usually pays out well. The Trifecta bet is when you pick the top three finishers in a specific race in the correct order.  The winning ticket holders are seen celebrating as they go and cash in their prize. Figure 1 | The Trifecta Winner If you do not care about the order in which the three horses place in a specific race, you can make a bet called the Trifecta Box, which has a different payout structure as you are just trying to note ... » read more
Wednesday May 30, 2018   
A few articles hit our inbox yesterday morning stating that four wild fires last summer were caused by PG&E power lines. In three instances it was concluded that PG&E violated state laws regarding vegetation management which ultimately resulted in fires and the utility may face fines as result. It wasn't all bad news for PG&E as the investigation by Cal Fire concluded that the largest of the four (8,400 acre La Porte fire) was started when a tree branch fell on a PG&E power lines, however the utility did not violate any laws in this instance and was not found at fault for the blaze. To keep this in perspective, this was is relation to just 4 of the 170 fires which Cal Fire is investigating.  The announcement comes on the heals of the announcement that ... » read more
Tuesday May 29, 2018   
Alliance Pipeline went out with an Open Season on March 25th for .4 BCF per day of additional capacity into the Chicago Citygate. The pipeline has access to two of the most prolific production basins in the world with Bakken and the Alberta Foothills along the path. That is why we believe this additional compression will be heavily subscribed on tomorrows closing date. Since both regions are subject to fair shipper rules for pipeline management, both must be allotted appropriate opportunity to sign any available space. That is it why it is very possible to have Canadian natural gas producers get prompted out of the additional opportunity to serve the lucrative Midwest market. The current abundance of associated gas coming out of North Dakota needs a home and this is an opportune ... » read more
Friday May 25, 2018   
    The real topic of this newsletter is the recent PJM capacity auction results which were just published this week. We'll get to that in a minute. These PJM capacity results came across my radar at a time when a few other things are going on in the market and the policy arena. Capacity markets have been on my mind. Two weeks ago the CPUC published its Green Book outlining some of the challenges that lie ahead in the rapidly evolving California electricity markets. The CPUC is worried about supply shortages (we wrote about that report two weeks ago). Last week I attended the "2nd Annual Northwest Power Markets" conference where a lot of topics were covered, including the need for better WECC capacity markets. Then this week we have seen spot prices in ERCOT shooting ... » read more
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