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In This Issue

NextEra Now Plans to Keep US Northeast Oil-fired Assets, After Winter Demand

PJM to Kick Off Giant U.S. Power Capacity Auction

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.


NextEra Now Plans to Keep US Northeast Oil-fired Assets, After Winter Demand

Platts | May 8, 2014

NextEra has reversed its decision to sell of about 800 MW of oil-fired capacity in the US Northeast after a second winter in which electric utilities leaned more heavily on oil-fired generation to keep the lights on.

NextEra announced in April 2013 plans to sell off its Wyman oil units in Yarmouth and the Cape unit in South Portland with a combined 796 MW of capacity.

"However, the bids we received were not consistent with our view of the fundamental value of the assets, and recent developments in regional market conditions have reinforced this assessment," chief financial offer Moray Dewhurst said during an earnings call Wednesday. "While these assets are not called upon to run frequently, they do play an important role in supporting the reliability of the electric system, and this has real economic value."

One year ago, Dewhurst said the oil units, which it bought in 1999, "no longer strategically make sense for the business" and have operated "very, very little for a long time."

Financial services company UBS said Wednesday that "the decision to retain the 796 MW of oil-fired generation in NEPOOL is yet another a bullish indicator on that market and is a positive read-through for other New England generators."

The reversal comes after back-to-back winters in which oil-fired generation played a larger role in US Northeast power generation than it had in previous years.

Electric utilities have added more natural gas-fired generation in recent years faster than pipelines to move the product can be built, which has led to gas curtailments, spiking natural gas prices and utilities taking a second look at fuel oil.

During the most recent winter, "gas pipelines were constrained even without significant use by gas-fired generators," according to ISO New England, which handles electric markets for Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. "Oil-fired generators were vitally important to reliability this winter."

ISO NE data show generation from oil-fired units averaged 15.050 GWh/d, or 5% of total generation, in the first quarter of this year, compared with about 1.848 GWh/d, or 0.6% of total generation, during the comparable period last year. (The ISO's data for oil-fired generation considers only power plants that burn exclusively petroleum products. Dual-fuel units that can burn either natural gas or oil products are included in the natural gas category, even if a facility might have burned oil on a particular day.)

Before the most-recent winter, ISO NE created a winter reliability program that provided a number of incentives to use oil to generate electricity. It is evaluating whether more incentives are needed for the 2014-2015 winter.


PJM to Kick Off Giant U.S. Power Capacity Auction

Reuters | May 8, 2014

PJM Interconnection, the biggest power grid operator in the United States, said on Wednesday it will open its capacity auction on May 12, seeking 165,007 megawatts of resources for the 2017/18 delivery year.

PJM said in a release it will close the auction, known in the industry as the Reliability Pricing Model's (RPM) Base Residual Auction (BRA), on May 16, and issue a report on the results on May 23.

The resources sought in the auction cover the period from June 1, 2017-May 31, 2018.

PJM operates the grid serving 61 million people in 13 Mid-Atlantic and Midwest states from New Jersey to Illinois and the District of Columbia.

Last year, PJM said it attracted a record amount of new generation and imports for the 2016/17 delivery year.

The 2016/17 auction procured almost 5,500 MW of new generation, and about 7,800 MW of imports, including about 4,700 MW of imports from the Midcontinent ISO, which operates the neighboring power grid in the U.S. Midwest and Gulf Coast.

The 2016/17 auction also procured 12,400 MW of capacity from demand response providers who pay consumers to reduce usage when needed, and 1,100 MW of energy efficiency capacity.

A megawatt can power 800 to 1,000 homes in PJM.

The 2016/17 auction procured 169,160 MW of capacity resources at prices ranging from $59 to $219 per megawatt-day, depending on the region. That was down from prices ranging from $136 to $357 per MW-day in the 2015/16 auction two years ago.

Natural Gas and Oil Market Update

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Natural Gas Prices Lose More Ground After EIA Data

MarketWatch | May 8, 2014

Natural Gas futures on Thursday fell further after the U.S. Energy Information Administration reported that supplies of natural gas rose 74 billion cubic feet for the week ended May 2. That was slightly more than the market expected as analysts surveyed by Platts forecast an increase of between 69 billion cubic feet and 73 billion cubic feet. Total stocks now stand at 1.06 trillion cubic feet, down 797 billion cubic feet from a year ago and 982 billion cubic feet below the five-year average, the government said. June natural gas was at $4.63 per million British thermal units, down 11 cents, or 2.3%. It was trading at $4.67 before the data.


arrow upWTI Crude Falls on Speculation Supplies Are Ample

Bloomberg | May 8, 2014

West Texas Intermediate crude dropped for the first time in three days on speculation U.S. crude supplies may rise amid weak demand.

WTI for June delivery slid 55 cents, or 0.5 percent, to $100.22 a barrel at 9:33 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 37 percent above the 100-day average for the time of day. Oil climbed 1.3 percent to $100.77 yesterday, the biggest gain since April 8.

Brent for June settlement slid 59 cents, or 0.5 percent, to $107.54 on the London-based ICE Futures Europe exchange. Volume was 10 percent below the 100-day average. The European benchmark crude was at a premium of $7.32 to WTI, compared with $7.36 yesterday.

Crude supplies fell to 397.6 million barrels in the week ended May 2, according to the EIA, the Energy Department’s statistical arm. Stockpiles were projected to rise 1.25 million, according to a Bloomberg survey. Total imports fell by 598,000 barrels a day, led by the drop in the Gulf Coast.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report


Working gas in storage was 1,055 Bcf as of Friday, May 2, 2014, according to EIA estimates. This represents a net increase of 74 Bcf from the previous week. Stocks were 797 Bcf less than last year at this time and 982 Bcf below the 5-year average of 2,037 Bcf. In the East Region, stocks were 473 Bcf below the 5-year average following net injections of 35 Bcf. Stocks in the Producing Region were 389 Bcf below the 5-year average of 844 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 119 Bcf below the 5-year average after a net addition of 12 Bcf. At 1,055 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
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