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In This Issue

National Grid Dealt Blow With Regional Pipeline Plans

PJM's Hot Summer Fails to Generate Demand

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

National Grid Dealt Blow With Regional Pipeline Plans

RI Central | September 15, 2016

This past June, National Grid submitted a request to Rhode Island’s Public Utilities Commission (PUC) to enter into an agreement with Algonquin Gas Transmission Company, a subsidiary of national pipeline operator Spectra Energy, in order to connect Rhode Island customers to extended natural gas service through the Access Northeast (ANE) Project.

The ANE Project is a proposed 125-mile pipeline from New York to Massachusetts which would provide area electrical plants quicker access to natural gas resources.

“There is not enough electricity coming into New England,” said David Graves, spokesperson for National Grid Rhode Island. “More and more electricity is being generated through the burning of natural gas, and as coal and other plants are scheduled to be retired in the next couple of years, natural gas seems a natural solution.”

Graves says that the ANE Project would expand capacity so that fewer customers struggle during cold months to heat their houses. Such participation, however, would not come without a cost as construction and connection costs would be in some way passed down to customers.

Graves emphasizes that upfront costs for the project would be outweighed by long-term energy and cost savings for National Grid ratepayers.

“We are at the very tail end of the supply line, that is why New England has some of the highest electric rates in the country,” he said. “The cost recovery [from the ANE Project] is money that would be returned to electric ratepayers in the form of lower electric rates.”

Payment is where National Grid now finds itself in a quandary, however. The Conservation Law Foundation, an environmental advocacy group, has called for the Rhode Island utility to dismiss its application to join the ANE project because of its plan to pass costs for a natural gas pipeline to electric consumers.

“We think this is a really risky project,” says Megan Herzog, attorney for CLF. “We don’t think electricity ratepayers should be on the hook for natural gas investments, and [the ANE project] would be a raw deal for Rhode Island

CLF argues that keeping electric utilities and power plants, such as those using natural gas or coal, as separate entities benefits customers because of the competition such a separation breeds.

“Having competition between power plants would benefit families and business by making the overall cost of electric cheaper,” she notes. “The reason for a competitive market is so that power plants would not put rate payers on the hook for costs with projects that are risky.”

The Massachusetts Supreme Court agrees with this position, too, ruling on Aug. 17 that the state’s Department of Public Utilities (DPU) “erred in determining that [Massachusetts state law] authorizes the department…to approve ratepayer-backed, long-term contracts for gas capacity entered into by electric distribution companies.”

Both National Grid and Spectra, along with partner Eversource Energy, have subsequently filed motions to withdraw their current applications before the Massachusetts DPU. The Conservation Law Foundation believes the utility should withdraw its Rhode Island application before the PUC as well, and has furthermore filed petitions before similar utility commissions in New Hampshire and Maine.

“We think [the Supreme Court decision] really changes the game,” said Herzog. “Without Massachusetts ratepayers on the hook for this project, National Grid is now asking families and businesses of Rhode Island to indemnify this risky project to benefit other customers in New England. Massachusetts consumers would receive the greatest amount of benefit.”

The CLF has support in high places, too, as Rhode Island Lieutenant Governor Daniel McKee, who has also filed a motion as an intervenor, expressed opposition to National Grid’s application last week.

“Although I support pipeline expansion in concept, National Grid’s current proposal imposes undue costs and risks on Rhode Island ratepayers—something I cannot endorse as an advocate for our state’s small business community,” said McKee in a statement. “I will continue to intervene before the Public Utilities Commission on dockets like 4627 to protect the interests of Rhode Island’s small commercial and residential customers.”

While National Grid has not filed a motion to withdraw its Rhode Island application, they will appear before the PUC on Sept. 6 for oral arguments on CLF’s motion to dismiss. Graves admitted that National Grid is ‘looking at other options’ to fund its participation in the ANE Project, and that any final decision is a long way off.

“Rhode Island statute is not the same as Massachusetts statute, and this was a single step,” says Graves. “It is a long road, [and] we are looking at several years from now before this pipeline can be built.”

“We have an obligation to plan for the future for our customers.”

Read More:

PJM's Hot Summer Fails to Generate Demand

Platts | September 15, 2016

This summer in the PJM Interconnection was hotter than the prior three, but systemwide peakload was lower than the highest peakload for those years, and PJM staffers are unsure why.

During Tuesday's PJM Operating Committee meeting, Chris Pilong, PJM dispatch manager, presented a written overview of PJM's operations in the period from June through August 2016, which was hotter than the same three-month periods of 2013, 2014 and 2015, judging by the number of cooling degree days at various cities around the PJM footprint. PJM's service territory stretches as far west as Chicago, as far east as New Jersey, as far north as the Pennsylvania shores of Lake Erie and as far south as eastern North Carolina.

The National Weather Service reported this summer's CDD total for Pittsburgh, which lies near the geographic center of the PJM footprint, was about 52% above normal and about 36% above summer 2015 levels.

Total load this June through August, at 226.6 TWh, was larger than total loads during the summers of 2013 through 2015, Pilong said. The largest June-through-August total over the previous three years was 216 TWh in the summer of 2013.

PJM had 23 hot weather alerts this summer, while the top number of such alerts for the previous three summers was 16 in 2015. Between 10,000 and 13,000 MW of generation was unavailable during this summer's hot weather alerts, Pilong reported.

However, the systemwide peakload this summer, 151,293 MW on August 11, was about 4% less than the systemwide peakload in the highest peakload for 2013-2015, which was 157,509 MW on July 18, 2013.

Also, the average day-ahead on-peak locational marginal price at the PJM West Hub was just $36.23/MWh this June through August, compared with $37.83/MWh in that period of 2015, $43.49/MWh in that period of 2014 and $46.53/MWh in that period of 2013, according to the Platts price database.

Possible contributors to the lower peakload this summer include behind-the-meter solar power and distributed energy resources, Pilong said. Other possibilities include conservation efforts and more efficient air conditioning, lighting and television.

The Operating Committee also learned that a transmission line of about 50 miles in length between Cunningham and Elmont, Virginia, northwest of Richmond, would be out of service from October 23 through June 2, and from September 6, 2017, through December 30, 2017. A rebuilt 500-kV line is slated to go into service by June 1, 2018.

The outage is not likely to reduce generation capacity, but it may cause minor thermal overloads and low voltages in the area, stakeholders were told.

Read More:

Natural Gas and Oil Market Update


Natural Gas Erases Losses After Stockpile Data

The Wall Street Journal | September 15, 2016

Natural gas prices rose Thursday morning, flipping up from losses after data showed a below-average storage addition last week.

The U.S. Energy Information Administration said natural-gas stockpiles grew by 62 billion cubic feet last week. While that is more than the 60 bcf expected by forecasters surveyed by The Wall Street Journal, it is lower than both last year’s addition and the five-year average addition for this week of the year.


Oil Jumps On Firmer Gasoline, U.S. Equities; Snaps Two-Day Rout

Reuters | September 15, 2016

Oil prices rose about 2 percent on Thursday, ending a two-day slide as prices tracked a surge in gasoline futures and higher U.S. equity markets.

Prices remained lower for the week so far. Over the previous two sessions, oil fell 6 percent, pressured by data showing large weekly builds in U.S. petroleum products and forecasts by the world’s energy watchdog and OPEC that signaled the global crude glut could persist into 2017.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 3,499 Bcf as of Friday, September 9, 2016, according to EIA estimates. This represents a net increase of 62 Bcf from the previous week. Stocks were 184 Bcf higher than last year at this time and 299 Bcf above the five-year average of 3,200 Bcf. At 3,499 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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