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In This Issue

Listen to the Real Energy Concerns

PJM Proposal Would Lengthen Reliability RTEP Cycle

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

Listen to the Real Energy Concerns

New Hampshire Business Review | January 18, 2017

New England is at greater risk of higher energy costs and price volatility today than a year ago

Six public opinion polls in 2016 – one each by ABC, NBC, Suffolk University and Bloomberg and two by CBS – found that the number one concern is jobs and the economy. Among other major concerns were terrorism, health care and immigration. Only in one poll was climate change mentioned.

Few would argue that climate change concerns need to be addressed, but the most prominent concern of most Americans is still jobs and the economy. That’s no less true in New England where climate-driven policies and lack of progress on energy infrastructure development, including natural gas pipelines and electric transmission lines, drive up costs, produce uncertainty and threaten reliability of electricity during extreme weather conditions.

Listen to what business leaders have said recently: 

 • Sig Sauer in New Hampshire: “Electricity costs today, and concerns about future price volatility, along with the inability in this region to build new energy infrastructure … put New Hampshire at a distinct disadvantage as we look to expand.” (Union Leader, Dec. 1, 2016)

 • Maine’s Bath Iron Works: “Electricity costs were one of the factors” that led to the loss to a Florida company of $10.5 billion government contract, “that could cost as many as 1,000 jobs.” (Portland Press Herald, Sept. 15. 2016)

 • Gorton’s Seafood in Massachusetts: “Making electricity more affordable” is a major factor affecting “a very, very competitive business” facing worldwide competition. (Gloucester Times/Salem News, Nov. 8, 2016)

These major employers have aggressive energy-efficiency programs in place and have explored solutions to reduce industrial electricity costs that are almost double the national average. While they don’t expect New England prices to drop to the national average, they are increasingly concerned that high energy costs are becoming a drag on their business prospects. 

A recent study by Daymark Energy Advisors for the New England Coalition for Affordable Energy concluded New England is at greater risk of higher energy costs and price volatility today than a year ago. The reasons are delays and cancellations of natural gas pipeline and electric transmission projects and energy policies that provide subsidies and other policy-mandated incentives for renewable energy, while discouraging natural gas expansion.

Opponents of infrastructure development argue that additional natural gas supplies and renewable energy are incompatible. It is a fallacious argument. 

A Washington Post story last August based on research from the Euro-Mediterranean Center on Climate Change concluded that “renewables and fast-reacting (natural gas) technologies … should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.” It found a nearly one-to-one correlation between additional natural gas generation and growth in renewables over a 23-year period.

Recent actions by New England states are leading to subsidized long-term renewable energy contracts that seem to favor emission reductions over price and reliability considerations. To achieve some balance, policymakers and regulators should allow some mechanism to ensure adequate year-round supplies of natural gas as fuel for electric power generators.

A balanced all-resource approach, which includes expansion of natural gas pipelines and electric transmission lines, should be based on a combination of factors, such as improving reliability, lowering costs, reducing emissions and complementing and supporting growth in renewable resources.

It is time to listen to issues of concern to companies throughout New England, such as chocolate maker Lindt & Sprungli, whose vice president of operations told the NH Union Leader last month, “the company is not willing to grow any more in New Hampshire … (without) finding ways to reduce our energy costs in this state.” 

It’s a story being told throughout New England, one that deserves a better ending. 

Read More:

PJM Proposal Would Lengthen Reliability RTEP Cycle

RTO Insider | January 18, 2017

PJM staff last week outlined a proposal to lengthen the RTO’s Regional Transmission Expansion Plan cycle for reliability projects from 12 months to 18 months.

Staff explained the plan at a special session of the Planning Committee on redesigning the Transmission Expansion Advisory Committee.

The proposal comes in response to more detailed analysis of the optimal timing for the planning cycle, a component of the TEAC redesign that began about a year ago, staff said.

The expansion of the cycle — along with the development of a flowchart for how projects will move through proposal windows — would represent a “memorialization” of existing processes that have never been specifically defined, PJM’s Mike Herman said.

The proposed change would take effect for the 2018 planning year, moving the beginning of the cycle to September 2017. The RTEP cycle for market efficiency projects would remain unchanged.

Stakeholders expressed concern about the decisional-process flowchart and asked for additional transparency around why certain projects are rejected. They also sought more opportunities to provide input.

Staff acknowledged some of the concerns but pushed back on others.

Paul McGlynn, PJM senior director of planning, said it would be challenging to rank projects against each other because of the difficulty in comparing the relative benefits of dissimilar project factors.

Vice President of Planning Steve Herling provided a hypothetical example of the challenge: “There’s no way to show how much a perceived benefit is going to wipe away the ability to get a right of way through the Gettysburg Battlefield.”

Alex Stern of Public Service Electric and Gas questioned the wisdom of trying to incorporate all project drivers into a single comprehensive manual and warned that critical pieces might get “lost in the sauce.”

PJM staff acknowledged his concerns. “Ultimately, I’m less concerned about the format of the manuals than about the content,” Herling said.

Stern also suggested that PJM include a provision to limit the potential for selling a project before or after it’s built, which attorney Steve Huntoon warned might create “unintended consequences that raise risk.”

The next meeting on the issue is scheduled for Feb. 10.

Read More:

Natural Gas and Oil Market Update


Natural Gas Flips to Gains After Stockpile Data

The Wall Street Journal | January 18, 2017

Natural gas prices rose Thursday morning, flipping up from losses after data showed a larger-than-expected drain from storage last week.

The U.S. Energy Information Administration said natural-gas stockpiles shrank by 243 billion cubic feet in the week eneded Friday. Analysts and traders surveyed by The Wall Street Journal forecast a drain of just 229 bfc and the five-year average for this week of the year is just 170 bfc.


Oil Prices Fall On Strong Dollar, U.S. Output Rise Expectations

Reuters | January 18, 2017

Oil prices fell on Wednesday to their lowest in a week, on a strong dollar and expectations that U.S. producers would boost output even as OPEC’s output fell from a record high.

U.S. shale production is set to snap a three-month decline in February, the U.S. Energy Information Administration said on Tuesday, as energy firms boost drilling activity.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 2,917 Bcf as of Friday, January 13, 2017, according to EIA estimates. This
represents a net decline of 243 Bcf from the previous week. Stocks were 431 Bcf less than last year at
this time and 77 Bcf below the five-year average of 2,994 Bcf. At 2,917 Bcf, total working gas is within
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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