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Wednesday Aug 24, 2022   
While the whole world continues to see higher prices in anticipation of a winter energy crisis particularly in Europe, there is one location that has not followed that sentiment. Over the past week maintenance outages on the Nova system combined with record levels of production have forced gas prices to seek much lower levels. The AECO cash price has sunk from $3 to only 15 cents. The price is the lowest of the past three years. During the summer of 2019 when a number of construction activities bound the Nova system there were regular price prints under 10 cents. This week's drop in AECO cash occurs while the Gulf Coast is posting near $10 per MMbtu putting the spot basis differentials at record levels.    Figure 1 | AECO and henry hub Cash for June-Aug 2022 (USD/MM) Most ... » read more
Monday Aug 22, 2022   
Mother Nature is delivering modest weather for the past couple of weeks and the latest 15-day forecast is carrying the pattern into the first week of September 2022, which means the Labor Day weekend is going to be somewhat cool across the country.  This is a bit different than what the Lower 48 experienced throughout June and July 2022 as temperatures were above normal for most of the country. Figure 1 | Lower 48 CDD Accumulation for 15-Day Forecast – Daily Despite the lack of power demand, we continue to see two things happen across the energy sector with the first being tied directly to the power demand profile; it is the lack of wind generation in key areas.  The two areas we continue to focus on are SPP and ERCOT as the swings in the hourly generation profile from ... » read more
Friday Aug 19, 2022   
Energy GPS Consulting recently completed two studies of the Pacific Northwest (PNW) market. Both of the studies evaluate the potential costs and impacts associated with potential changes to the PNW hydro system. There are two important and significant changes being proposed to the hydro system. Both of these changes are intended to increase the viability of salmon. One of the proposed changes would require increasing the amount of spill, taking water that otherwise would have run through the generators and diverting it to the spillways. The other proposed change requires the removal of the Lower Snake River Dams. The spill rules would have an immediate impact. The breaching of the Lower Snake River Dams (LSRD) would likely not happen until around 2030. Certainly, these are complex issues ... » read more
Thursday Aug 18, 2022   
With the weather in the region hot again with temperatures nearing 100 degrees in Portland, the Pacific Northwest grid is growing significantly tighter.  The Mid-C bilateral price moved up to trade more than $30 higher than SP15 for this past Wednesday—a big change from the price on Monday where Mid-C came in more than $40 below SP15—as the need was there to send a price signal to keep the MW generated in the Northwest at home instead of sending them over the transmission lines down to California.  Thankfully, a change took place this week on the hydro system that has provided a boost to the supply stack in the PNW.  This past Monday, August 15th marked the transition from the initial set of summer fish spill regulations to a less strict set of requirements that ... » read more
Wednesday Aug 17, 2022   
The SPP market continues to deliver price volatility across the two zones (North and South) as well as provide a thoroughfare for megawatts to move in/out of adjacent regions.  We continue to expand the coverage of the region that moves up and down the middle third of the Lower 48; to which we have created the SPP Power Package.  Such a package dives into the grid’s market fundamental supply/demand components and displays them in charting tools, dashboards and written commentary that can be found on the EnergyGPS website portal. In today’s blog, we detailed a few of the key pieces that are on display daily. Starting with the net load, the graph below illustrates a year-on-year comparison for all SPP to which we can carve into sub-regions to really see how the price ... » read more
Tuesday Aug 16, 2022   
One year ago the ElPaso Pipeline suffered a rupture near Coolidge, Arizona that killed two people. Immediately ElPaso shut down the L2000 segment of 30 inch pipe cutting .54 BCF per day of flows from West Texas to the California Border as repairs and inspections mandated by the Department of Transportation - Pipelines and Hazardous Materials Administration(PHMSA). ElPaso Pipeline is an older pipeline with some lengths having an age close to 50 years old. As a result extensive repairs and inspections are needed to ensure the pipe is safe to use. This past week Kinder Morgan, the owner of Elpaso Pipeline, posted a note stating the repaired segment will continue to be out of service at the behest of the PHMSA at least through the end of the year.  Figure 1 | AZ Exports to ... » read more
Monday Aug 15, 2022   
During times of heat and the days when most homes did not have air conditioning units, the early morning hours were based on opening all the windows in the house and letting the overnight coolness penetrate the inner walls.  After a couple of hours, the windows were shut, the drapes were pulled down and the curtains closed as this was the method used to keep the house cool the rest of the day.  Figure 1 | Closing the Curtains – No light Shed Once moderate temperatures returned, the curtains were drawn to shed more sunlight on what was happening outside and bring in some of the rays that were once overpowering.  Last week, the most recent EnergyGPS Newsletter article, titled ‘CAISO Pulls Back the Curtain on Batteries’, analyzed the new battery data being ... » read more
Friday Aug 12, 2022   
When we think about prices in ERCOT, we typically like to break them down into “buckets” based on the implied heat rate. Implied heat rate can be calculated in any interval by dividing power price by gas price, and gives a hint about what might be driving price formation. The lower the heat rate, the fewer thermal generators will find it economic to run. At higher heat rates, more revenue is available and less efficient plants will be able to come online. We think of intervals with implied heat rates below about 5 as oversupplied: gas isn’t what’s setting price, and there’s probably a lot more generation available than what’s needed. In contrast, heat rates above about 15 indicate scarcity. Again, the operating costs of gas plants aren’t ... » read more
Thursday Aug 11, 2022   
The middle of August 2022 is another example of how the Pacific Northwest and California are connected as both regions are looking at heat moving into their respective territories.  Such an event is setting up a battle of the megawatts that typically flow between the two regions on both the AC and DC transmission lines on any hour for a given day. Figure 1 | CAISO 7-Day Peak Demand – Actual and Forecast Starting with California, the heat is going to be extended along the coastal region of the state to which has not been seen for over two years.  When this occurs, the demand areas around San Franscisco and Los Angeles tend to consumer a substantial amount of energy for AC cooling and the grid has exposure to sub-regional bottlenecks around getting megawatts from source to ... » read more
Wednesday Aug 10, 2022   
The beginning of August has shaken up the SoCal gas world with SoCal CityGate pricing more than a dollar over PG&E CityGate. It’s the first time this summer we’ve seen a premium for SoCal like this, contrary to previous summers when SoCal has priced over frequently to move power burns up north.  Last week, we published a monthly report, titled ‘July 2022 Fireworks’, that detailed the fundamentals in July that led to SoCal’s low pricing last month. Let’s review the fundamentals from July to understand our starting point for this month. The weather in California remained mostly mild in July, even as the surrounding regions experienced summer highs. For those betting on SoCal needing gas to meet demand for some hot summer days, this July was a ... » read more
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