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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 

Issue week: June 27th, 2019  (Wk 26)

 

 

 

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POWER MARKETS

 

WEST Since last week, Day Ahead ATC averages have dropped further, from $24.05/ MWh to $20.66/MWh in SP15 and from $18.68/MWh to $15.66/MWh in Mid-C. In the term market, prices for the balance of the year have also contin-ued to fall, thanks to forecasts of very mild weather. Without substantial cooling load over the summer, demand will stay relatively normal and keep daily settle-ments modest because of the lack of stress on the grid.

ERCOT  Term heat rates were down in the front of the curve, but term natu-ral gas has offset that decline by rallying by some $0.05 - $0.15/MMBtu over the past week.  Aside from a few intervals of triple- and quadruple-digit pricing last Sunday, real time prices at the load zone were relatively flat for the week.  The recent trend has shown little congestion in North and Houston Zones, but the MTD basis settles for June in the South and West Zones has been near $2.50/MWh and $9.00/MWh, respectively.  Looking ahead to the next week, the Texas weather forecast is calling for moderate temperatures with rainy weather for most of the week.

 

EAST Index prices in NYISO Zone A recovered somewhat this week, averaging around $45/MWh. In the forward markets, strong production of dry natural gas and other bearish influences have driven down prices for next winter.

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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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