Patriot Energy
Home    About    Electricity Solutions    Natural Gas Solutions    Green Solutions    Contact     Request a Quote    Sign Up for Our Newsletter >

In This Issue

An Inside Look at PJM, Which Controls the Flow of Electricity for 13 States

2014 Summer Outlook: ISO-NE Expects Adequate Resources to Meet Demand for Power

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price


NOAA 6 to 10 Day Outlook
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.


An Inside Look at PJM, Which Controls the Flow of Electricity for 13 States

ABC | May 1, 2014

It's in a nondescript office park in Norristown, just off the King of Prussia exit of the Turnpike.

But as unremarkable as PJM is from the outside, it's a modern marvel on the inside.

"It's the largest grid in the world," said Robert Powelson, Chairman of the Public Utility Commission, who accompanied abc27 on a recent tour of the facility.

Electricity for 13 states and Washington, D.C. is controlled from this Philly suburb. $40 billion dollars a year is generated at PJM, making it the largest wholesale market in the world.

"There's never been a blackout in the PJM footprint," Powelson notes.

Security is almost non-existent outside, but tight inside. We must pass several checkpoints and leave our cell phones at the door. No cameras or recording devices are permitted.

It's an impressive control room of monitors, maps and manpower. Every contributing power plant on the grid is lit up and observed, its input and output controlled. It's a real power pirouette, ordering up enough juice to keep everyone's lights on but not too much as to be wasteful.

"You want to figure out exactly what the demand on the system is going to be, schedule the right resources to be online when you need em, take em off when you don't need them," explained Mike Bryson, Operations Manager at PJM. "And while you're doing that, making sure you're that you're scheduling the most economic, the cheapest resource next, so it reduces impacts to our customers."

Bryson won't soon forget January 7th. He still shudders when asked about the system-wide low temperatures that caused record demand. PJM blew through its cheaper power sources to keep up and was forced to use the expensive stuff. The aftermath was skyrocketing electric bills and fingers being pointed at PJM.

"We are suffering the complaints, and having to deal with the complaints and the heartaches of customers, primarily because of failings in the wholesale electricity market," said PUC Commissioner Jim Cawley at a public hearing.

Cawley blames PJM for not inspecting companies that are paid to be ready to deliver cheaper power when needed. Twenty-two percent of them were off-line January 7.

"They are paid to stand by and be ready to provide power when needed," Cawley said with a stern and emotional voice. "PJM, for whatever reason, stopped testing a number of these people receiving capacity payments and almost a third of them did not deliver when the power was needed."

Bryson concedes Cawley's point and says PJM is investigating.

"How come those generators were out when we needed them the most? That's probably the one we'll spend a lot of time over the next nine months fixing," he said.

While PJM works on its fixes, consumers are left to wonder if the market was fixed. Cheaper power not showing up, forcing the more expensive stuff into play. A preliminary report by the Federal Energy Regulatory Commission (FERC) suggests no wrongdoing.

"At first glance, they don't see any market manipulation," Powelson said, "but they're gonna be doing a deeper dive looking into this."

"That's what Enron did in California back in the 1990's," said reporter Dave DeKok, who covered the PUC for the Patriot-News during deregulation. "They (Enron) took plants off line to cause the price of electricity to go up. Did that happen here? Probably not. But you just never know. It's that nagging doubt and nobody's really looking. You'll never get an answer to that question."

Even the guy in charge of all this power understands why people are left wondering if somebody has too much.

"It's something I think should be concerning people to make sure there was no kind of manipulation of the market," Bryson said.

He said possible changes for next winter are more thorough inspections of companies promising to supply power and accepting capacity payments. Tougher penalties for companies promising power and not delivering are also a possibility.

Winter is typically not PJM's most taxing season. Summer is, because all air conditioners run on electricity, while people can heat their homes with natural gas and oil.

But January 2014 broke demand records. Typically, in the vast PJM footprint, there are cold areas and warmer areas and, according to Bryson, the grid can borrow power from a warmer (lower demand) spot to help in the colder (higher demand) areas.

This January, the entire footprint was cold, pushing demand through the roof and prices with it.


2014 Summer Outlook: ISO-NE Expects Adequate Resources to Meet Demand for Power

Business Wire | May 1, 2014

The New England region is expected to have the resources needed to meet consumer demand for electricity this summer, according to ISO New England Inc., the operator of the region’s bulk power system and wholesale electricity markets.

2014 summer forecast

Under summer weather conditions of about 90 degrees Fahrenheit (°F), electricity demand is forecasted to peak at about 26,660 megawatts (MW). If an extended heat wave were to occur and temperatures reached 95°F, the peak could rise to about 28,965 MW. Both forecasts include the demand-reducing effect of regionwide energy-efficiency (EE) measures acquired through the Forward Capacity Market (FCM). If EE measures were not taken into account, the respective peak forecasts would be 28,165 MW and 30,470 MW.

“Widespread energy-efficiency efforts across New England have reduced the region’s forecasted peak demand for electricity,” said Vamsi Chadalavada, executive vice president and chief operating officer of ISO New England. “Beginning June 1, the remaining units of the Salem Harbor power station in the Greater Boston area will retire, representing a reduction of 585 MW of generating capacity in the region. While ISO New England expects to have sufficient resources to meet consumer demand this summer, this retirement is the first in a series of expected large resource retirements in the coming years that will reduce the available generating capacity in New England, resulting in the need for new resources.”

New England has a variety of capacity resource types it can use to meet peak summer demand and maintain reliability, including generators, demand-response resources, and electricity imports from neighboring power systems.

Through the FCM, 29,135 MW of generation has capacity supply obligations this summer; however, the maximum electricity output of a generator may be greater than its supply obligation. The ISO has observed that generators typically have offered the additional megawatts, above their obligation, into the energy market when prices are higher and demand is peaking. If all the region’s generators were operating at maximum capability, the total amount of electricity produced would be approximately 30,900 MW.

A total of 1,280 MW of net electricity imports and 700 MW of demand-response resources that can reduce power usage during tight system conditions were also procured through the FCM auction process.

Summer operations and procedures to maintain reliability

During the summer, consumer demand for electricity peaks in New England, largely because of the increased use of air conditioning. Because of the region’s growing reliance on natural gas as a fuel to produce electricity, ISO New England has taken steps to communicate about the risks associated with uncertain natural gas supplies during peak operating conditions. Although concerns about fuel supply to natural-gas-fired generators are more significant during the winter months because the pipelines transporting the fuel historically have been at- or near-full capacity, difficulties can arise during the summer months because of planned and unplanned pipeline maintenance.

A recent Federal Energy Regulatory Commission order and subsequent ISO New England tariff changes have improved the ability of ISO system operators to communicate with the operating personnel of interstate natural gas pipeline companies for maintaining power system reliability.

In addition, ISO New England has well-established procedures to ensure system reliability in the event of an unexpected resource outage, an extended heat wave that causes electricity demand to spike, fuel supply issues that affect the amount of generation available, or a combination of these factors. Actions available to ISO system operators include calling on demand-response resources to curtail their energy use, importing emergency power from neighboring regions, and asking businesses and residents to voluntarily conserve energy.

Last summer, electricity usage peaked on July 19, 2013, at 27,379 MW. The all-time record for peak demand was set on August 2, 2006, when demand reached 28,130 MW. In New England, 1 MW of electricity can power approximately 1,000 homes.

Natural Gas and Oil Market Update

arrow up

Natural Gas Prices Lose More Ground After EIA Data

MarketWatch | May 1, 2014

Natural Gas futures on Thursday fell further after the U.S. Energy Information Administration reported that supplies of natural gas rose 82 billion cubic feet for the week ended April 25. That was more than the market expected as analysts surveyed by Platts forecast an increase of between 73 billion cubic feet and 77 billion cubic feet. Total stocks now stand at 981 billion cubic feet, down 790 billion cubic feet from a year ago and 984 billion cubic feet below the five-year average, the government said. June natural gas was at $4.75 per million British thermal units, down 7 cents, or 1.4%. It was trading at $4.78 before the data.


arrow upWTI Oil Drops to Six-Week Low on Ample Crude Supply

Bloomberg | May 1, 2014

West Texas Intermediate oil fell to a six-week low after U.S. crude inventories extended a record high. Brent declined on signs of a Chinese economic slowdown.

WTI for June delivery dropped 54 cents, or 0.5 percent, to $99.20 a barrel at 9:32 a.m. on the New York Mercantile Exchange. Futures touched $98.74, the lowest level since March 21. WTI slipped 1.8 percent in April, the biggest monthly decline since November. The volume of all futures traded was about 36 percent above the 100-day average for the time of day.

Brent for June settlement declined 92 cents, or 0.9 percent, to $107.15 a barrel on the London-based ICE Futures Europe exchange. Volume was 7.2 percent lower than the 100-day average. The European benchmark crude traded at a $7.95 premium to WTI, down from $8.33 at yesterday’s close.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report


Working gas in storage was 981 Bcf as of Friday, April 25, 2014, according to EIA estimates. This represents a net increase of 82 Bcf from the previous week. Stocks were 790 Bcf less than last year at this time and 984 Bcf below the 5-year average of 1,965 Bcf. In the East Region, stocks were 466 Bcf below the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 396 Bcf below the 5-year average of 824 Bcf after a net injection of 35 Bcf. Stocks in the West Region were 122 Bcf below the 5-year average after a net addition of 13 Bcf. At 981 Bcf, total working gas is below the 5-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot
Disclaimer: The information contained in these reports is gathered from public and/or internal sources and is presented solely for the convenience of our customers and Newsletter Subscribers. Patriot Energy Group makes no representation or warranty, express or implied as to the accuracy or completeness of the information set forth in this newsletter, and Patriot Energy shall not have any liability to any person or entity resulting from use of this information in any way.
Phone: (800)343.4410   | Email:   |  |  Stay Connected: Facebook Twitter LinkedIn
© 2014 Patriot Energy Group