Weekly Power Outlet US - Week 2

This week PJM held the first of what will end up being many ‘what happened during winter storm Elliot’ calls that included an overview.

The eye-popping number was the penalty to be handed down for the underperformance during a capacity event, expected to be between $1-$2 billion. This one is going to have plenty of blame to go around when all is said and done. While PJM did issue plenty of warnings, it estimated load. They were also faced with 23% of total PJM capacity on forced outage with the majority being natural gas. PJM said they would have a full analysis by April, and NERC and FERC have announced investigations.

Last week natural gas tumbled on a higher-than-expected withdrawal, while rallying (slightly) this week on an abnormal January build in storage. It seems EIA storage data is becoming relevant only in spring and summer build season as prognosticators look to make winter storage levels. Production levels is the current barometer for pricing and the market chatter is with US production above 100 Bcf/d and no new LNG in the immediate future, plenty of gas.

Earlier this week we attended a conference in rainy southern California - good for us! We thought we would pass along some thirty-thousand-foot comments on the current concerns from the C-suite of some small utilities. Without getting into great detail, the number one and two concerns are finding and retaining people which is in line with most businesses. The other big concern is reliability. Getting calls from ISOs over Christmas talking curtailment was, to say the least, a true wake-up call. To some, the once-a-decade winter events are becoming yearly.

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