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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 

Issue week: June 20th, 2019  (Wk 25)

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POWER MARKETS

 

WEST Over the past week, Day Ahead ATC averages have dropped from $27.20/ MWh to $24.05/MWh in SP15 and from $21.86/MWh to $18.68/MWh in Mid-C. 

Strong renewable generation and tempered load due to mild temperatures have lowered index prices. In the term markets, prices for the balance of the year and calendar years 2020 and 2021 have moved up. 

ERCOT Summer 2019 on-peak prices have sold off by some $8-$10/MWh over the week, in spite of calls for increased demand due to higher-than-normal temperatures. Load zone basis for the week has been negligible in both the North and the Houston Zones and has settled between $4.00/MWh and $7.00/MWh in the South and West. Real-time prices have settled in the $20s/MWh in all four zones over the week.

 

EAST NYISO index prices remain in the low $20s/MWh to mid-$20s/MWh. In the forward markets, summer prices continue to take hits from various bearish factors, one of which is the robust production of dry natural gas, which still shows no sign of slowdown.

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 EPA DEALS AN ACE

 

On Wednesday, Environmental Protection Agency (EPA) Administrator Andrew Wheeler revealed the Affordable Clean Energy rule (ACE), its replacement for the shuttered Clean Power Plan (CPP). The news has so far met with contro-versy.

 

The acceleration of the shift of the U.S. energy sector toward renewable ener-gy over the last decade has been attributable in no small part to increased awareness of the dangers of greenhouse gas emissions. The CPP, put in place by the Obama Administration in 2015, attempted to address those dangers by setting minimum carbon emission standards for U.S. power plants but was placed on hold by the Supreme Court in 2016. Robert Walton of UtilityDive reports that, in contrast to the CPP, ACE all but embraces coal by granting states leeway to determine their own fuel supply, which may include fossil fuels, and allowing upgrades to older coal-fired plants to enable them to stay online.

 

Although supporters of the Trump Administration’s new plan claim that it will reduce compliance costs associated with current regulations by nearly $400 million annually while keeping the U.S. on track to reduce emissions, the chart below, taken from Rhodium Group and reported by Brad Plumer in The New York Times, shows that total carbon dioxide emissions in the U.S. actual-ly increased by 3.4 percent last year. Plumer noted that, despite the closing of many coal plants, emissions due to electricity generation grew by 1.9 per-cent. Therefore, it is difficult to imagine that ACE, which actually facilitates the continued burning of fossil fuels, will reduce emissions as much as the CPP intended.

 

Indeed, Sierra Club Executive Director Michael Brune remarked, “Trump and Wheeler’s Dirty Power Plan throws out some of the most important climate policies our country has ever seen and replaces them with a do-nothing poli-cy that will actually increase pollution at many dirty plants."

 

ACE is set to go into effect next month but still faces legal hurdles, which could put its fate in the hands of the Supreme Court. If that happens, the Court could determine whether or not the EPA has the power to establish national restrictions on greenhouse gas emissions that force states to reduce their reliance on coal. A ruling against such authority would definitely impair the ability of future presidents to take executive action to tackle climate change down the road.

 

 

 

Disclaimer: This report is for informational purposes only and all actions and judgments taken in response to it are recipient’s sole responsibility. Champion Energy Services does not guaranty its accuracy. This reports is provided ‘as is’. Champion Energy Services makes no expressed or implied representations or warranties of any kind. Except as otherwise indicated in this report, this report shall remain the sole and exclusive property of Champion Energy Services and shall be free from any claim or right, license, title or interest. Champion Energy Services shall not be liable for any direct, indirect, incidental, consequential, special or exemplary damages or lost profit resulting from this report.

 

 

 

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