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In This Issue

The 10 States With the Highest Electricity Prices

PJM Prices in First Half of 2014 Highest Since 2008

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.


The 10 States With the Highest Electricity Prices

Utility Dive | August 21, 2014

The price of electricity varies wildly depending on where you live. The most expensive state's electricity prices, for example, are three times the national average.


That would be Hawaii. The state's electricity prices — the highest in the U.S. — are nearly three times higher than the national average of $0.1284 per kilowatt-hour.

Hawaii's electricity price of $0.37 per kilowatt-hour equates to a $334 monthly electricity bill for the average consumer, according to calculations based on EIA data. That comes out to more than $4,000 per year spent on electricity.

But why Hawaii of all places, you ask? Much like the U.S. Virgin Islands, American Samoa, Puerto Rico and Guam, the islands largely rely on expensive oil imports to fuel electricity generation.


The good news for those back on the mainland is that the lower 48 states do not rely on oil to anywhere near the same extent.

The bad news? Residential electricity prices have risen from a national average of $0.0725 per kilowatt-hour at the start of 2001 to the aforementioned $0.1284 per kilowatt-hour in May 2014.


Electricity rates across the country are expected to continue increasing under pressure from environmental regulations, the cost of grid modernization and stagnant load growth.

But as utility rates go up and the costs of emerging technologies come down, the economics of non-utility alternatives such as solar-plus-storage will become increasingly attractive. Hence, the utility death spiral.
The infamous utility death spiral


Today, there are only two places in the U.S. where the price of rooftop solar is below the current utility rates.

There’s Hawaii — where fuel costs are driving up the price of grid power. And there’s ConEd's service territory in New York — where the cost of solar is well below the utility's $0.2565 per kilowatt-hour rate for residential consumers at $0.18 to $0.23 per kilowatt-hour, according to Sanford Bernstein.

That’s the so-called tipping point for utilities and their customers. As soon as distributed energy resources can cut customers' energy costs without innovative financing schemes and subsidies, the electric power industry will have entered a new paradigm.

It should come as no surprise, then, that these two regions — Hawaii and New York — have both started on two of the most significant reforms of the grid in years. Notably, these reforms both aim to lower electricity prices by encouraging the utilities to better integrate distributed energy resources onto their grids.

The rest of the industry will be watching.

PJM Prices in First Half of 2014 Highest Since 2008

Megawatt Daily | August 21, 2014

PJM Interconnection power prices in the first half of 2014 were the highest since 2008, a new report shows, but industry observers expect the price extremes experienced in the first quarter are unlikely to be repeated soon.

"The state of the PJM markets in the first six months of 2014 reflected the extreme winter weather conditions in January and a return to more typical weather conditions in the second quarter," states the State of the Market Report for January through June, released Thursday by Monitoring Analytics, PJM's independent market monitor. "The energy market reflected the combination of increased, weather-related demand and higher fuel costs in higher energy market prices."

The load-weighted locational marginal prices averaged $69.92/MWh in the first six months, compared with $37.96/MWh for the same period of 2013. Since 1998, the only previous time the load-weighted average LMP for the first six months have exceeded that number is 2008, when it hit $74.77/MWh, the report states.

Although the extreme highs in the first half of 2014 occurred in the first three months, load-weighted average LMPs this April, May and June also exceeded the corresponding averages for April, May and June 2013, PJM staff market reports show.

"I do not know if prices will continue to go down, but obviously do not expect them to return to [the] height of the first quarter without extreme weather conditions," said Marji Rosenbluth Philips, Direct Energy director of regional transmission organization and federal services, in an email Thursday.

Regarding the present quarter, Dan LoBue, president of Competitive Energy Consulting, said, "Summer has been extremely soft with the below- and well-below-normal temperatures for the entire Eastern Interconnection, not just PJM."

LoBue has been working with clients to optimize generation offer curves, trying to "extract whatever margins that could be obtained since pricing has been very competitive," he said in an email, adding that he is "seeing shorter schedules and tighter margins on market-committed combined-cycle [units] and combustion turbines than in a typical summer."

Another extraordinary set of numbers in the State of the Market Report concerns congestion costs, the report notes, jumping from about $306 million in the first half of 2013 to about $1.1 billion in the first half of 2014.

"Total congestion costs increased because of the cold weather in January 2014, but congestion was also much higher in March 2014 than in March 2013, and congestion was higher in each of the first six months of 2014 than in the first six months of 2013," the report states.

The AP South Interface, near the borders of Maryland, Virginia and West Virginia, contributed the most during the period, $455.4 million in the first six months of 2014, the report states.

The report concludes that the results of PJM's energy, capacity, regulation and financial transmission rights markets were generally competitive in the first six months of 2014.

Natural Gas and Oil Market Update

arrow up

Natural Gas Turns Lower After Larger Supply Increase

Market Watch | August 21, 2014

U.S. natural gas supplies rose 88 billion cubic feet in the week ended Aug. 15, the Energy Information Administration said Thursday. Overall, a stockpile of 2,555 bcf in storage was 535 bcf below the 5-year average of 3,090 Bcf. Analysts polled by Platts expected an increase between 81 bcf and 85 bcf. Natural gas futures turned lower after the data, with the September contract recently down 2 cents, or 0.6%, at $3.80 per million British thermal units. The contract traded at $3.88 per million Btu shortly before the data release.


arrow upBrent Crude Slips as Manufacturing Slows From China to EU

Bloomberg | August 21, 2014

Brent crude dropped as measures of Chinese and European manufacturing slowed, a sign that fuel demand may weaken. West Texas Intermediate was little changed.

Brent for October settlement decreased 66 cents, or 0.7 percent, to $101.62 a barrel on the London-based ICE Futures Europe exchange at 9:13 a.m. in New York. The volume of all futures traded was 2.5 percent below the 100-day average for the time of day.

WTI for October delivery fell 1 cent to $93.44 a barrel at on the New York Mercantile Exchange. The September contract rose 1.7 percent to expire at $96.07 yesterday. Volumes were 18 percent lower than the 100-day average.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report


Working gas in storage was 2,555 Bcf as of Friday, August 15, 2014, according to EIA estimates. This represents a net increase of 88 Bcf from the previous week. Stocks were 500 Bcf less than last year at this time and 535 Bcf below the 5-year average of 3,090 Bcf. In the East Region, stocks were 251 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 223 Bcf below the 5-year average of 1,029 Bcf after a net injection of 14 Bcf. Stocks in the West Region were 60 Bcf below the 5-year average after a net addition of 9 Bcf. At 2,555 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 ($ per mmBtu)

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.
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