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Wednesday Feb 24, 2016   
The end of Winter is in sight with less than a week remaining in February and the March NYMEX HH contract approaching expiration. Since early last week, the March contract has steadily declined as warm weather proliferated across the country.  In light of recent HDD forecasts for early march, we believe the decline in the gas market is likely to continue. On the morning of the 22nd the outlook for the first week in March was relatively strong compared what we have seen thus far this winter as HDDs in the East were expected to be well above ... » read more
Tuesday Feb 23, 2016   
The powerburn analysis for the month of February can be divided into the front half of the month and the back half. Figure 1 | US Powerburns - Daily 7 Day Rolling Average As you can see in Figure 1, the front half of the month showed more power burns, with the majority of the output showing up in the South Central where ERCOT's net demand was stronger.  The Midwest/East saw a little an uptick as well due to a barrage of nuclear units tripping during one of the cold snaps early in the month. Figure 2 | Nuclear Outages - Daily As we got to the back half of the ... » read more
Monday Feb 22, 2016   
Sunday's CAISO auction results were quite interesting as each major gen hub as well as the tie point nodes we track in our LMP email has the heavy load average clear under the light load average. Figure 1 | EnergyGPS CAISO LMP Tables - Flow Date 2/21/2016 Leading up to these results, we have been seeing Malin's node settling in with the heavy load hours under the light load hours.  From a fundamental standpoint, this situation has been discussed and debated for some time now that solar and wind capacity has grown within the state, with the former impacting the ... » read more
Friday Feb 19, 2016   
Over the past 24 hours, ERCOT has seen its wind generation hit record levels over a block of hours within a day for the month of February. Figure 1 | ERCOT Wind Generation - Hourly Figure 2 shows the daily average wind generation across ERCOT for the 18th and how it compares to the past six months.  What stands out is the 18th is showing a record high for that time period, which is an all-time high since wind capacity has grown in ERCOT over the past year. Figure 2 | ERCOT Daily Average Generation When you overlay the ERCOT load with the wind generation, you ... » read more
Thursday Feb 18, 2016   
As we head into the back third of February, most of the colder weather is behind us as the Northeast is starting to come out of the frigid weekend, the Midwest is balmy, Texas is net longer due to wind picking up and its load shifting down and the West is just downright warm, especially in Southern California where daytime highs are in the mid/upper 70's and expected to be back up in the upper 80's by this coming Monday/Tuesday. Figure 1 | Burbank Temperatures - Actual vs Forecast Since it is still the middle of February, this transition to the warmer weather ... » read more
Wednesday Feb 17, 2016   
As natural gas and oil prices hit multi-year lows heading into this winter there were many questions about how the supply stack would respond.  The questions mainly circulated around whether gas prices would rise high enough to induce the same level of coal and oil generation we had seen the previous two years.  As temperatures remained above normal and gas prices failed to get off the ground, it seemed that fuel switching would be a non-factor this winter.  However, this weekend we saw temperatures plummet in the East of the country. Despite ... » read more
Tuesday Feb 16, 2016   
The Pacific Northwest wind development industry has been contracting since the California “Bucket” rules were passed in 2011. The Bucket rules require California utilities to procure the vast majority of their RPS obligations from in-state resources. New long term deals from Northwest wind projects came to a halt immediately. After a seven year stretch where more than 4,000 MW of wind capacity was installed in BPA’s service territory, development of new wind in the Northwest came to a screeching halt. Since the middle of 2012 installed wind capacity ... » read more
Friday Feb 12, 2016   
If I were to tell a bedtime story about electricity, it would start with something like this, "Once upon a time the electricity people decided to put names to blocks of time.  Since hour ending 7 through hour ending 22 had a higher demand profile, it got the name 'heavy load'.  Hour ending 1 through 6 and 23/24 were lower in demand and acquired the name 'light load'.  From a price perspective, the higher the demand the more expensive the marginal cost of energy was, therefore the heavy load clearing price is greater than the light load clearing ... » read more
Thursday Feb 11, 2016   
In comparison to years past, the NEISO power market has struggled to get off the ground this winter with the strongest prices occurring on January 6th with a Mass Hub day-ahead clear of $66 for the On Peak Average (OPA). However, an interesting situation is unfolding in New England as the current load forecasts indicate we may see a new high clear for winter 2016, which so happens to be on a Sunday.  This is just another indication just how warm it has been this winter when a Sunday beats out a weekday in the middle of February.   Figure 1| ... » read more
Wednesday Feb 10, 2016   
Yesterday the HDD forecasts for the next 15 day fell slightly as the revised model runs indicated a quick thaw after the upcoming cold snap across the East this weekend.  NYMEX hub traded down around 5 cents in response the the increase in temperature outlook.  While the main focus remains on the upcoming demand event, we believe the true market risk is in the quick recovery and what it means for the remainder of the winter.   Figure 1| Daily Gas Weighted HDD Delta from Normal - by EIA Region  Overall the total US is on average ... » read more
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