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In This Issue

Why Your Utility Bill's Still Rising Even When Power's So Cheap

Massachusetts Legislators Finalize Net Metering Bill

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

Why Your Utility Bill's Still Rising Even When Power's So Cheap

Bloomberg | April 7, 2016

Record-low costs for power in the U.S. haven’t translated into lower monthly payments for consumers.

As the price of electricity in the eastern U.S. fell by half over the last decade, utilities raised monthly bills for residential customers by 26 percent, according to government data. Consumer advocates say the power companies are using falling electricity costs as cover to raise other charges. Utilities counter that it’s payback for billions of dollars worth of government-mandated improvements to long-neglected infrastructure.

It’s “a good thing that energy prices have fallen off and allowed the required capital to be installed and be done without impacting the consumer,” said Exelon Corp. Chief Executive Officer Chris Crane in an interview during a conference organized by Bloomberg New Energy Finance in New York on Monday.

Electricity itself makes up about a third of the average utility bill, down from about half just eight years ago, thanks to a flood of cheap fuel, natural gas extracted with fracking from tight-rock formations. The rest of the retail charges are for delivering supplies, including adding enough capacity to handle demand surges.

Spot power traded in the market run by PJM Interconnection LLC has averaged about $31 a megawatt-hour this year. That’s less than half the $84.55 average in 2008.

In Pennsylvania, ground zero for the U.S. shale revolution, consumers aren’t seeing the savings you’d expect, said Tanya McCloskey, the state’s acting consumer advocate. Utility projects, including power-line sensors and aging equipment replacements, are pushing up charges, with grid maintenance costs accounting for almost half a total bill.

Spending on the transmission system by investor-owned utilities gained for a fifth year in 2014 to $42 billion, according to the latest data from Edison Electric Institute, a Washington-based trade group.
PJM Projects

PJM, operator of the mid-Atlantic power grid, approved $3.2 billion in new transmission projects last year as it seeks to improve reliability of the system. Among projects completed was PPL Corp.’s 500-kilovolt Susquehanna-Roseland power line extending from eastern Pennsylvania to northern New Jersey.

“There’s been a lot of upward pressure on the distribution rate as you make repairs to the system,” said McCloskey.

Thanks to the shale boom and rise in renewable generation, consumers are paying less for the electricity that keeps their lights, said Matt Mooren, energy and utility adviser at PA Consulting Group based in Madison, Wisconsin. For a residential utility rate of 10 cents per kilowatt-hour, electricity itself accounts for about 3 to 4 cents these days, he said. It was closer to 5 or 6 cents in 2008, before the shale boom took hold, he said.

The onslaught of intermittent, renewable energy resources on U.S. power grids also is partly to blame for the rising delivery costs. Moving away from large, centralized power plants and toward smaller, more widely distributed sources has utilities installing digital sensors, meters and more power lines, the costs of which are getting passed along to consumers.
Super Storm

Devastating storms that battered New York and Washington have spurred utilities there to spend billions on making the systems more resilient. Washington is spending $1 billion to place some of its most vulnerable power lines underground, while in New York, Consolidated Edison Inc. is investing $1 billion to shore up the system in the aftermath of Super Storm Sandy in October 2012.

And it’s not all about installing more lines and sensors. Power-grid operators in the eastern U.S. are ramping up auctions to secure future power supplies from generators to ensure they have enough fuel to keep the lights on when demand peaks. Ratepayers ultimately pick up the tab for these supplies through bills.

Across the PJM region, new reliability rules raised payouts to generators from these auctions last year by $1.9 billion to $5 billion. A typical residential electricity bill will rise $2 to $3 a month as a result of the program in 2018.

“We’re not really seeing many reductions in electric costs,” Stefanie Brand, a lead advocate for New Jersey consumers. “It’s really not fair to the ratepayers.”

Read More:

Massachusetts Legislators Finalize Net Metering Bill

Utility Dive | April 7, 2016

Massachusetts' solar sector recently reported the legislative impasse delayed more than 500 solar projects worth about $618 million.

Frustrated lawmakers and stakeholders sent letters and petitions calling for more action as utilities hit their caps or rapidly approached them. More than 5,000 petitions and letters were sent to House Speaker Bob DeLeo (D), and 100 lawmakers sent a letter to their legislative compatriots demanding they lift the caps.

Now, the committee has agreed on a final bill, which awaits a final vote from both chambers, according to the AP.

At issue in the bill is how to reimburse solar projects for the excess energy they export to the grid. The Senate pushed for remuneration credits closer to the retail rate and a cap high enough to reach the 1,600 MW solar target set under former Gov. Deval Patrick (D) in 2013 and endorsed by current Gov. Charlie Baker (R). The House instead wanted to increase the cap on net metering by 2% for public and private projects, and reduce the value of credits paid to large-scale solar owners from the retail rate of $0.16-$0.17/ kWh to the wholesale rate of $0.03-$0.04/kWh​.

The solar sector favored the Senate bill while utilities favored the House bill. The final bill passed by the committee appears to strike a compromise between both sides by raising the cap 3%, instead of the proposed 2%, and keeping remuneration closer to the retail rate for smaller-scale solar projects. The bill also enables utilities to charge a minimum fee, in an acknowledgment of arguments from the utility sector that solar users aren't paying their fair share to maintain the grid.

The solar sector appears relieved now that a final bill has been hashed out and stalled solar projects can move begin to forward again.

"While the compromise proposal includes cuts to the rates at which some customers are credited for solar power, it gets the industry moving again,” SEIA CEO Rhone Resch said in a statement. "We urge lawmakers to move quickly to approve this proposal and we look forward to continuing to work with the legislature and Gov. Baker to craft long-term, sustainable policies for the solar industry in Massachusetts."

The finalized bill now awaits a final yes-or-no vote from both chambers and cannot be amended, according to the AP. If passed, the bill would go to the governor's desk, where it could then be signed into law.

Key Points:

A Massachusetts legislative committee made up of six House and Senate members agreed on a compromise bill to raise net metering caps and revise the remuneration rate for solar projects, PV Magazine reports.

The legislation, H. 4173, lifts the net metering cap by 3% for private and public solar projects and reduces existing retail remuneration rate to the wholesale rate for commercial and community solar projects once the state's 1600 MW solar target is reached. The bill also allows utilities to charge a minimum bill to cover fixed costs.

The bill comes in the wake of a split in the Legislature that left the solar industry in limbo after legislators failed to agree on a final bill to address the net metering cap before departing for winter recess.

Read More:

Natural Gas and Oil Market Update


Oil Slips as Iraqi Exports Rise, Offsetting US Inventories Drop

CNBC | March 24, 2016

Oil steadied at around $40 per barrel on Thursday as a surprise fall in U.S. inventories the previous day was offset by an increase in exports from Iraq, underlining global oversupply.

Brent futures were at $39.52 at 8:43 a.m. ET, down 32 cents from the last close and about 8 percent above lows reached earlier this week.

U.S. crude futures were at $37.47 per barrel, down 28 cents from their last close.


Natural Gas Rise as Supply Falls

The Wall Street Journal | April 7, 2016

Wednesday’s output was the lowest of the year and Thursday’s output is likely to be about the same, according to analytics firm Platts Bentek. Now, at 71 billion cubic feet a day, output is down 2.7% from the record high hit in February.

Many investors have been speculating that natural-gas producers will start massive supply cuts soon because of a recent collapse in prices that took it to its lowest inflation-adjusted level in its history of trading on the New York Mercantile Exchange. Energy Aspects has said the recent pullback could be the first sign that trend is starting.

Natural gas for May delivery recently gained 6 cents, or 3.1%, to $1.971 a million British thermal units on the Nymex. It is the market’s third-best daily percentage performance of the past two months.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 2,480 Bcf as of Friday, April 1, 2016, according to EIA estimates. This represents a net increase of 12 Bcf from the previous week. Stocks were 1,008 Bcf higher than last year at this time and 874 Bcf above the five-year average of 1,606 Bcf. At 2,480 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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