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In This Issue

New England's Energy Situation 'Precarious,' ISO Leader Says

PJM Says Compliance With Clean Power Plan Won’t Disrupt Electric Supplies

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

Tables

NOAA 6 to 10 Day Outlook
weatherweather
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.

 

Market Overviews

New England's Energy Situation 'Precarious,' ISO Leader Says

Union Leader | September 29, 2016

Energy supplies, reliability and cost are concerns for many New Englanders. But they don’t inspire insomnia in many.

As president and CEO of ISO New England Inc., however, Gordon van Welie has more reason to be kept up at night than most. ISO-NE oversees the region’s power system.

“I really do think we’re facing some choices in the region,” he said Wednesday afternoon, “some crossroads or forks in the road that we’ll have to figure out which one we want to take.”

Van Welie’s remarks came at a discussion of New England’s power markets and infrastructure, hosted by the New England Council at Saint Anselm College’s New Hampshire Institute of Politics.

And he was blunt about the seriousness of the challenges, many of which lack easy solutions, that are looming for the region in just a matter of years. Van Welie said New England’s current operating situation is precarious, and it could become unsustainable in extreme cold weather after 2019.

“The ISO does not use words like precarious or unsustainable lightly,” said Peter Howe, a former longtime reporter for the Boston Globe and New England Channel News who moderated the conversation. “Take that seriously.”

If New Hampshire and other local states are in danger of having the lights turn off during a cold snap in just four years, what can be done now?

The answers are not so simple, van Welie said.

Many coal and oil generators have been retired in recent years, and that trend will only continue as more renewable energy quickly comes online, he said. And demand is expected to remain roughly flat over the next decade.

But ensuring adequate supply should be a top priority, Van Welie said. Without sufficient storage mechanisms, the reliability of renewable energy can be variable and dependent on the weather.

At the center of New England’s energy challenge lie two potentially competing aims, van Welie said: achieving energy reliability through the competitive wholesale market, as the system’s framework is set up currently, and reducing carbon emissions. Though the latter goal is a crucial environmental priority, policy steps to achieve it have the potential to disrupt the market structure.

Van Welie said that personally, he views carbon pricing as one sensible solution — and one that seems likely for the United States in the long term. “A lot of the fear is dissipating around carbon pricing amongst asset owners,” he said, adding that even Capitol Hill seems to be warming somewhat to the idea.

In New England, many of the states support carbon pricing — but having all six onboard would make the Federal Energy Regulatory Commission more inclined to approve such a filing from ISO, he said.

In response to a question from the crowd of more than 100, van Welie said he thinks the Seabrook Station Nuclear Power Plant and the Millstone Nuclear Power Plant in Waterford, Conn., are likely to remain online at least in the short term.

Van Welie lauded the efforts of the New England Power Pool, which has started a stakeholder process to try to figure out possible market adjustments and solutions for the region’s energy and environmental objectives. The group is releasing a framework document by early December, working with ISO and others in 2017 to formulate a plan.

Whatever the ultimate solution, van Welie added, something has to be done. “A decision not to act is going to also be a decision,” he said.

Read More:
http://www.unionleader.com/energy/New-Englands-energy-situation-precarious-ISO-leader-says-092916

PJM Says Compliance With Clean Power Plan Won’t Disrupt Electric Supplies

State Impact | September 29, 2016

America’s biggest power-grid operator said electric supplies to a 13-state region would not be disrupted by state efforts to comply with the federal Clean Power Plan, and that wholesale electricity costs would rise only modestly in the drive to reduce carbon emissions from existing power plants, thanks largely to low natural gas prices.

An analysis by Pennsylvania-based PJM of the controversial CPP concluded that states could ensure adequate supplies of power at little extra cost to customers regardless of how they opt to comply with emissions-reduction targets.

Wholesale electricity costs would rise by 1.1 percent to 3.3 percent on average, PJM said, depending on whether states choose to meet the CPP targets individually or in cooperation with other states, such as in the Regional Greenhouse Gas Initiative among nine northeastern states not including Pennsylvania.

The analysis examined seven “pathways” to compliance with the plan, and determined that “resource adequacy” for power supply could be maintained regardless of which pathway a state chose

Regional rather than individual compliance would enable states to retire fewer coal-fired plants and to open fewer new gas-fired plants because there would be more options for meeting lower emissions targets across a multi-state region, PJM said in the 117-page analysis released on Thursday.

A regional approach would also reduce costs for individual states, the report said. “The cost of compliance for the entire PJM region differs according to the compliance pathway chosen, but regional compliance leads to lower costs,” it said

And it concluded that the retirement of coal-fired power plants would reduce grid “congestion” – the inability at peak times to transmit power because a section of the grid has no more capacity – because new gas-fired plants are more likely to be built closer to population centers than old coal plants which were typically built near coal deposits.

“What we thought was one of the key takeaways is that, however the states choose to implement the CPP, that the capacity needs would be met,” said Ray Dotter, a spokesman for the Audubon, Pa.-based organization.

Dotter said the study, which was conducted at the request of PJM’s states, fundamentally asked whether power supplies would be disrupted by the states’ efforts to reduce their carbon emissions to meet CPP targets.

“Could compliance with the Clean Power Plan force so many generating resources to retire and go away that there wouldn’t be an adequate power supply?” Dotter said. “Our analysis showed that of the various ways open to the states to comply with the plan, the adequacy of power supplies could be maintained."

Critics of the CPP, which was published in August 2015, have argued that retirement of coal-fired plants would lead to higher electricity costs and job losses in coal-producing regions. Some two dozen states, not including Pennsylvania, have sued the U.S. Environmental Protection Agency to block the plan, arguing that it represents an illegal attempt to reorganize the nation’s electricity grid.

In February, the U.S. Supreme Court stayed implementation of the plan while the states’ suit against it is decided by an appeals court or the high court itself.

In Pennsylvania, Gov. Tom Wolf in June signed into law a bill giving the legislature more time to consider the state’s CPP compliance plan, which was originally due for submission to the EPA in September this year. Lawmakers were given 180 days to review the plan, up from an earlier limit of 100 days.

State Sen. Don White, a Republican cosponsor of the bill, argued that reducing existing plants’ carbon emissions by 32 percent from 2005 levels by 2030, as required by the CPP, would have a “devastating” impact on Pennsylvania’s coal-producing regions.

Rob Altenburg, Director of the Energy Center at the environmental group PennFuture, said PJM’s conclusions may undermine critics’ arguments against the CPP but he predicted that the new report won’t lessen opposition to the emissions plan even though it was designed to be flexible and relatively easy to comply with.

“The Clean Power Plan is a fairly moderate rule,” Altenburg said. “In many cases, there isn’t a whole lot that needs to be done.”

Pennsylvania, for instance, is probably already more than half way toward meeting its CPP targets because it retired some coal-fired power plants in response to low natural gas prices even before the CPP was published, Altenburg said.

Even though the opposing states are unlikely to be deflected from their campaign against the CPP, the PJM report adds weight to support for the plan, Altenburg said.

“It does definitely undermine the argument that a lot of these other states have been making,” he said. “We hear that it’s going to cost billions. It’s the same thing that we heard from the automakers when they were fighting seat belts and airbags.

“It certainly is evidence that the plan will work as designed, and will not be nearly as expensive as the opposition has been saying,” Altenburg said.

Read More:
https://stateimpact.npr.org/pennsylvania/2016/09/02/pjm-says-compliance-with-clean-power-plan-wont-disrupt-electric-supplies/

Natural Gas and Oil Market Update

Arrow

Natural Gas Falls as Cooler Weather Begins to Take Hold

The Wall Street Journal | September 29, 2016

Natural-gas prices fell Wednesday on expectations that demand for the fuel would decline as temperatures cool.

Unusually hot late-summer weather has kept appetite keen for natural gas to fuel electricity for air conditioning. But as the weather cools down in the coming weeks, consumption is expected to fall.

Prices for natural gas for October delivery settled down 4.4 cents, or 1.5%, to $2.952 a million British thermal units on the New York Mercantile Exchange. The October contract expired at settlement Wednesday. The more-actively traded November contract fell 4.8 cents, or 1.6%, to $3.002/mmBtu.

  Arrow

Oil Slips As Focus Shifts To Details Of Opec Deal

Reuters | September 29, 2016

Oil prices slipped on Thursday as investors questioned whether an OPEC agreement to curb production - the group’s first such deal since 2008 - would be enough to rebalance a heavily over-supplied market.

The Organization of the Petroleum Exporting Countries agreed on Wednesday to cut output to 32.5-33.0 million barrels per day (bpd) from around 33.5 million bpd, estimated by Reuters to be the output level in August.

Prices rose 6 percent on Wednesday, feeding general risk appetite and boosting energy shares. The European oil and gas index .SXEP was up 4 percent on Thursday and the pan-European STOXX 600 index rose 2 percent.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Summary
Working gas in storage was 3,600 Bcf as of Friday, September 23, 2016, according to EIA estimates. This represents a net increase of 49 Bcf from the previous week. Stocks were 90 Bcf higher than last year at this time and 220 Bcf above the five-year average of 3,380 Bcf. At 3,600 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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