Weekly Power Outlet US - Week 45

Electricity day ahead prices pulled back this week following the substantial pullback in natural gas. The chart below shows the December front month trading near $3.60 while testing $3 this morning. A warmer near-term weather forecast across the US sent futures lower.

Along with fundamentals, natural gas followed oil lower as WTI breached the $80 mark for the first time since this summer. Some market commentators have been talking about some speculative long positions in the gas and oil markets. While fundamentals in gas are a bit bearish, the move does feel like a speculative unwind.

EIA data was delayed this week for a planned system update. Next week the market will get to digest two weeks' worth of storage when reported November 16.

This past week included election week in the US. Since it's an off year, the normal discourse was lacking. That said, there were a couple of important energy related items on the ballot. Possibly the most consequential, or interesting, was Texans giving the Public Utility Commission of Texas, the authority to run a $10 billion fund to provide funding to oversee monies used to upgrade the generation stack and grid reliability. Roughly 70% of the money is targeting dispatchable generation, with 20% earmarked for microgrids and the last 10% for grid infrastructure.

Opponents argued this is a taxpayer funded incentive for the fossil fuel industry, while proponents argued it was needed to keep up with the growing electric demand. Some pundits commented that Uri, and some close calls this fall led to overwhelming support for the upgrades. Proposition 7 passed with about two-thirds of the vote.

This week FERC Chair Willie Phillips and NERC CEO Jim Robb released a statement regarding ISO-NE reliability with the possible closing of the LNG Everett terminal in Boston. The terminal mostly supplies a gas plant scheduled to be retired next spring which leaves some questions about the terminal's future role. In the past, we've mentioned how ISO-NE is constrained by a lack of natural gas pipelines, which leave LNG as the marginal fuel when demand increases. This has led to some very unfavorable economics as electricity prices are subjected to the world LNG price during peaks. While the economics of consumers might be less than desirable, the shortfall of fuel capacity could create a real issue during peak periods. The letter encourages all parties involved to keep negotiating an outcome keeping the terminal online.

NOAA WEATHER FORECAST

DAY-AHEAD LMP PRICING & SELECT FUTURES

RTO AROUND THE CLOCK CALENDAR STRIP

DAILY RTO LOAD PROFILES

COMMODITIES PRICING

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