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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: August 15th, 2019  (Wk 33)

 

 

 

POWER MARKETS

 

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WEST Unseasonable heat has not only pushed daily prices up in SP15 and NP15 but also affected prices for the balance of the month in the term market. Futures contracts throughout the curve are trading slightly higher than last week.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending August 9, U.S. inventories increased by 49 bcf, a shade
under market predictions of 50-64 bcf. Total stockpiles now stand at 2,738 bcf, up by 15% from a year ago but 3.9% below
the five-year average for the same week.

Futures have been trading generally sideways, but the September contract has been well bid, thanks to a strong spot
market. Although the total U.S. rig count has been slowly declining since its peak earlier this year, production is expected
to be strong in the near future.

ERCOT  Real time prices have settled at nearly $200 / MWh ATC for this month! Of that total, the ORDC price adder has averaged nearly $80 / MWh for the month as well. The combination of reduced wind output, exceedingly high temperatures, and intermittent unit outages have tested the grid, to the point of the physical responsive capacity falling
near the critical 2,000 MW level. Conditions might moderate over the next few days, but both temperatures and load are expected to ramp back up again on Monday. Meanwhile, fixed power prices were up week-over-week some $0.40 - $3.00, depending on term.

 

EAST Congestion in NYISO Zone A has been driving an increase in prices this week. The Day Ahead ATC average is 24.96/MWh, and the Real Time ATC average has risen from $18/MWh earlier in the week to $30.98/MWh. Prices are stable in the other NYISO zones, which have been unaffected.

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WEATHER 

Temperatures will be above average in both the southwestern and the northeastern regions of
the U.S. over the 1-to-5-day forecast period.

The warming trend will spread across the entire country during the 6-to-10-day forecast period. The
heat should be especially intense in the Southwest and coastal part of the Northeast.

The above-average temperatures are expected to persist throughout the country in the 11-to-15-
day forecast period.

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HEATWAVE TRIGGERS RARE EMERGENCY ALERT IN ERCOT

 

Five consecutive days of triple -digit temperatures in Texas culminated in the first Energy Emergency Alert (EEA) from ERCOT in five and a half years around 3:00 p.m. on Tuesday, August 13. The surging demand in the Lone Star State at that time momentarily destabilized the ERCOT wholesale market. As shown in the graph below, real -time prices actually topped $9,000/MWh.

To help ensure a reliable electric system, ERCOT issues EEAs of varying levels when its operating reserves drop below specified thresholds. Tuesday ’s EEA1 signified that reserves had dropped below 2,300 MW (from the “normal” 3,000 MW) and meant that, per its policy, ERCOT could “call on all available power supplies, including power from other grids, if available. ” Fortunately, circumstances did not warrant an EEA3, which could have resulted in rotating outages. Robert Walton of Utility Dive reported that, in this week ’s case, ERCOT merely advised consumers to limit their cooling demand and use of large appliances.

Amid the heat wave, ERCOT recorded a new system peak demand for the year to date on August 12. Demand came in at 74,531 MW, 1.44% above last year ’s peak of 73,473 MW and 7.22% higher than the 2017 peak of 69,512 MW. However, it was still below the forecast peak for this summer of 74,853 MW. Therefore, if the heatwave continues, another record would not be surprising.

According to Walton, "Heading into summer, ERCOT said the planning reserve margin was 8.6%, but expected it to rise in 2020 and 2021 as new wind and solar projects in the interconnection queue come online." Those new resources will certainly improve grid reliability and should help stabilize prices, but, in the meantime, Tuesday’s price spike will likely raise costs this month for customers subject to real -time prices.

 

 

 

 

 

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