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In This Issue

Market Monitor Finds PJM Wholesale Electricity Markets Competitive

Solar Energy Deployment Could Double in Massachusetts

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.


Market Overviews

Market Monitor Finds PJM Wholesale Electricity Markets Competitive

Market Monitor | December 2, 2016

PJM Interconnection’s wholesale electric energy, capacity and regulation markets produced competitive results during the first nine months of 2016, according to the 2016 Quarterly State of the Market Report for PJM: January through September, released today by Monitoring Analytics, LLC, the Independent Market Monitor for PJM.

The Independent Market Monitor, Joseph Bowring, announced findings of the report today. The report is the Independent Market Monitor’s assessment of the competitiveness of the wholesale electricity markets managed by PJM in 13 states and the District of Columbia. The report includes analysis of market structure, participant behavior and market performance for each of the PJM markets.

“Our analysis concludes that the results of the PJM Energy, Capacity and Regulation Markets in the first nine months of 2016 were competitive,” Bowring said.

Energy market prices decreased significantly from the first nine months of 2015 as a combined result of lower fuel prices and lower demand. The load-weighted average real-time LMP was 24.7 percent lower in the first nine months of 2016 than in the first nine months of 2015, $29.32 per MWh versus $38.94 per MWh.

Energy prices in PJM in the first nine months of 2016 were set, on average, by units operating at, or close to, their short run marginal costs. This is evidence of generally competitive behavior and resulted in a competitive market outcome.

Net revenue is a key measure of overall market performance as well as a measure of the incentive to invest in new and existing generation to serve PJM markets. In the first nine months of 2016 compared to the first nine months of 2015, average energy net revenues decreased by 23 percent for a new combustion turbine, 22 percent for a new combined cycle, 60 percent for a new coal plant, 71 percent for a new diesel unit, 34 percent for a new nuclear plant, 25 percent for a new wind installation, and 33 percent for a new solar installation.

Total energy uplift charges decreased by $181.7 million or 63.9 percent in the first nine months of 2016 compared to the first nine months of 2015, from $284.5 million to $102.8 million. The relatively low uplift charges paid in the first nine months of 2016 were primarily a result of mild weather conditions and low fuel prices and correspondingly low LMPs.

Congestion costs decreased in PJM by $320.7 million or 28.1 percent, from $1,143.0 million in the first nine months of 2015 to $822.2 million in the first nine months of 2016. Congestion reflects the underlying characteristics of the power system, including the capability of transmission facilities, the fuel costs and geographic distribution of generation facilities and the geographic distribution of load. Congestion is neither good nor bad, but is a direct measure of the extent to which there are multiple marginal generating units dispatched to serve load as a result of transmission constraints, and the costs of operating those units. ARRs did not serve as an effective way to return congestion revenues to load. ARR and FTR revenues to load offset 95.7 percent of the total congestion costs within PJM for the first four months of the 2016 to 2017 planning period and 86.5 percent of the total congestion costs for the 2015 to 2016 planning period.

The Independent Market Monitor (also known as the Market Monitoring Unit or MMU) evaluates the operation of PJM’s wholesale markets to identify ineffective market rules and tariff provisions, proposes improvements to market rules and tariff provisions when needed, monitors compliance with and implementation of the market rules, identifies potential anticompetitive behavior by market participants and provides comprehensive market analysis critical for informed policy and decision making. Joseph Bowring, the Market Monitor, ensures the independence and objectivity of the monitoring program.

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Solar Energy Deployment Could Double in Massachusetts

PV Tech | December 2, 2016

Massachusetts has recently initiated a proposal under the Baker administration to double solar energy development in the state.

Known as the Next Generation Solar Incentive, the proposal features a bonus paid per kilowatt-hour delivered through a declining block grant model.

The new policy will result in a further 1.6GW of solar PV being deployed, alongside varying rates for projects of different scale.

The commitment to solar development in the Commonwealth was applauded by the Solar Energy Industries Association (SEIA) at a community solar project dedication hosted by Clean Energy Collective.

“For the last decade, Massachusetts has been one of the leading solar energy markets in the nation and with forward-looking policies, like the one governor Baker has proposed, that leadership will be cemented,” said Dave Gahl, SEIA’s director of state affairs, northeast. “While there are many details yet to be worked out, the new incentive proposal will put the Bay State on a path to having 5GW of solar installed by the year 2025. That's enough to power 800,000 homes."

The proposal is currently under a formal public comment process, and has not been officially instigated yet. It would however be a significant boost to Massachusetts’ booming solar industry, which is currently ranked sixth in the country with around 1.2GW of capacity installed.

“There is a solid foundation here upon which to build and we’re looking forward to working with the state’s leadership to craft a final proposal that includes an extension of the SREC II program so solar projects and the thousands of jobs supporting them do not slip through an unintentional policy gap,” Gahl said.

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Natural Gas and Oil Market Update


Natural Gas Continues to Rise on Falling Stockpiles

The Wall Street Journal | December 2, 2016

Natural-gas prices continued to rise Thursday as cooler forecasts raised expectations for demand and new federal data showed the amount of gas in storage is falling.

Natural-gas futures for January delivery are up 11.7 cents, or 3.49%, at $3.469 a million British thermal units on the New York Mercantile Exchange. Natural gas has been on a tear, surging 24% in the last two weeks to settle Wednesday at its highest price in nearly two years.


Oil Prices Jump More Than 2 Percent After Opec Output Deal

Reuters | December 2, 2016

Oil prices rose more than 2 percent on Thursday, building on big gains made after OPEC and Russia agreed to restrict output, even as analysts warned other producers were likely to top up supply.

The Organization of the Petroleum Exporting Countries agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted “a big hit” and dropped a demand that arch-rival Iran also slash output.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 3,995 Bcf as of Friday, November 25, 2016, according to EIA estimates. This represents a net decline of 50 Bcf from the previous week. Stocks were 24 Bcf higher than last year at this time and 235 Bcf above the five-year average of 3,760 Bcf. At 3,995 Bcf, total working gas is above the five-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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