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In This Issue

EIA: Electricity generation will decline 1% this year before rebounding in 2018

Lower-Priced PSEG Transmission Project Still Raises Cost Concerns

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

EIA: Electricity generation will decline 1% this year before rebounding in 2018

UtilityDive | March 8, 2017

While the long-term direction of the utility power mix is toward renewables and away from fossil fuels, recent energy market shakeups have numbers jumping around a bit.

Gas traded at historically low prices last year, forcing some coal out of the market. But despite a rash of plant closures, an expected rise in gas prices will send coal generation above gas this winter season.

EIA Acting Administrator Howard Gruenspecht said this winter’s warm weather "is cutting into U.S. natural gas demand, with natural gas consumption during February expected to be the lowest for the month in eight years.”

But also: “While U.S. total electricity generation is expected to decline almost 1% this year, the share of coal-fired generation is forecast to increase.” Coal production was already cut back over the last two years, and so the expected rise in demand will result in a sharp uptick of about 4%.

Wind capacity ended last year at 81 GW, and EIA said it expects that to rise to 95 GW by the end of 2018.

The report predicts utility-scale solar capacity will rise 44% from the end of last year to 31 GW by the end of 2018. That would make solar energy 1.4% of total utility-scale electricity generation in 2018, EIA said.

“Solar power is expected to be the largest growing renewable energy source, with total U.S. electricity generation capacity from solar more than doubling from the end of 2015 to the end of next year," said Gruenspecht.

EIA said gas will make up about 32% of the country's generation this year, down from 34% in 2016, before rebounding somewhat to 33% in 2018%.The decline in gas generation this year is primarily due to a rise in gas commodity prices.

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Lower-Priced PSEG Transmission Project Still Raises Cost Concerns

NJ Spotlight | March 9, 2017

First PJM grid upgrade to be competitively bid out still too rich for Delaware’s blood

The regional operator of the power grid is reviving a controversial transmission project involving the complex of nuclear plants operated by PSEG Power in South Jersey.

The staff of PJM Interconnection is recommending a slimmed-down version of the project, which has generated heated debate because costs have increased significantly since it was initially announced back in 2015. That led to the project being put on hold and a new review undertaken this past August.

Most of the dispute has revolved around allocation of costs among ratepayers in the region, a particular concern in Delaware — and one apparently not allayed by changes detailed by the staff on Friday. The project is viewed as upgrading the reliability of the power grid by PJM.

In a statement issued late Friday, Delaware Gov. John Carney said the project, as currently financed, would place an unjust burden on residential and industrial ratepayers in the state. “Delaware businesses and families would see higher monthly electric bills and receive next to nothing in return in the way of direct benefit,’’ the governor said.

The proposal is being closely watched by the industry and energy analysts because it is the first transmission project to be bid out competitively, instead of being awarded automatically to the incumbent utility (in this case, Atlantic City Electric).

The latest recommendation, which goes to the full PJM board, trims the total project cost that had escalated to $418 million to a cap of $278 million. The staff recommended a new transmission line from the nuclear power plant be built by LS Power, instead of one proposed by Public Service Electric & Gas, which, like PSEG Power, is a subsidiary of Newark- based Public Service Enterprise Group.

In the latest version, the interconnection point would change from the Salem unit to Hope Creek plant. It also determined that previously suggested upgrades were unnecessary, and an alternative transmission route proposed by PSE&G would provide less cost certainty than the one proposed by LS Power.

The abandonment of the PSE&G route also eliminates the line going through the Supawna Meadows National Wildlife Refuge in South Jersey, a route that raised concerns among regulators at the New Jersey Board of Public Utilities. PSE&G had sought to address those concerns by altering its original route on a new right-of-way outside of Supawna.

In its comments, PSE&G insisted its route provided more stability for the power grid and greater reliability than the proposal submitted by LS Power.

Transmission work is increasingly lucrative for electric utilities. In this instance, if the recommendation is adopted, PSE&G’s project slice would be $132 million. The utility now gets 44 percent of its rate base from transmission, according to a disclosure during its earnings call last week.

The recommendations are scheduled to be taken up by the PJM Board at a meeting on April 6. The issue of cost allocations remains to be determined by the Federal Energy Regulatory Commission, which currently lacks a quorum.

The PJM staff recommendation revised the project in-service date to June 1, 2020.

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Natural Gas and Oil Market Update


Natural Gas Price Bounces Following Inventory Report

24/7 Wall St. | March 9, 2017

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 68 billion cubic feet for the week ending March 3. Analysts were expecting a storage decline of 59 billion cubic feet.

The five-year average for the week is a withdrawal of around 136 billion cubic feet, and last year’s storage decline for the week totaled 57 billion cubic feet. Natural gas inventories rose by 7 billion cubic feet in the week ending February 24.


Oil Prices Slide More, U.S. Crude Below $50

Reuters | March 9, 2017

Oil prices slid nearly 3 percent on Thursday, extending the previous session’s dive that brought prices to the lowest levels this year, as record U.S. crude inventories fed doubts about whether OPEC-led supply cuts would reduce a global glut.

U.S. crude prices fell through the $50 a barrel support level, with market participants unwinding some of the massive number of bullish wagers they had amassed after a deal by top global oil producers to limit output.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 2,295 Bcf as of Friday, March 3, 2017, according to EIA estimates. This represents a net decrease of 68 Bcf from the previous week. Stocks were 192 Bcf less than last year at this time and 363 Bcf above the five-year average of 1,932 Bcf. At 2,295 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

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