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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: October 17th, 2019  (Wk 42)

 

POWER MARKETS

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WEST Maintenance on the Northwest Pipeline over the past few weeks has prevented the withdrawal of gas at Jackson Prairie and yielded high index prices and volatile forward prices for this coming winter in Mid-C. With the completion of maintenance on the pipeline, fears of Jackson Prairie’s unavailability during winter have been al-leviated. Consequently, prices for winter in Mid-C are significantly down.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending October 11, U.S. inventories increased by 104 bcf, in line with the ex-pected range of 99-115 bcf. Total stockpiles now stand at 3,519 bcf, up by 16.3% from a year ago but 0.4% below the five-year average for the same week.

Immediately after the EIA report, the NYMEX front-month (November) contract traded at $2.318/MMBtu, $0.015 above Wednesday’s close. All months from March 2020 through Febru-ary 2021 were also up by at least $0.02/MMBtu. Basis was up into SoCal Gas from the near term through five years out but slightly down in PG&E over the same pe-riod. October cash prices were lower in both regions.

ERCOT  Real-time prices continue to soften from their lofty levels on the first of the month in the North and Houston Zones but continue to find support from local outages and reduced wind output in the South and West Zones. The ORDC adder for October has dropped by approximately $11/MWh since last week to $6.50/MWh.

EAST  Prices are steady across all markets in the region. Day Ahead prices are barely higher than last week in Mass Hub, about $2/MWh higher than last week in Hudson Valley, and around $1/MWh higher than last week in PJM West Hub.

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WEATHER 

While the rest of the country enjoys generally seasonable temperatures during the 1-to-5-day forecast period, a tropical storm is developing in the Gulf region.

Over the 6-to-10-day forecast period, cooler weather should prevail from the Rockies through the Great Plains while the West Coast and North Atlantic Coast should warm up and Santa Ana winds should blow through Southern California.

Temperatures should drop be-low seasonal averages across the country in the 11-to-15-day forecast period.


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CALIFORNIA GOVERNOR CALLS FOR UTILITY REFUNDS AND INVESTIGATION AFTER NEARLY 2 MILLION LOSE POWER IN PRE-EMPTIVE BLACK-OUTS

 

Pacific Gas & Electric (PG&E) is receiving government and consumer blowback after it initiated wide spread power outages throughout Northern California last week to prevent ignition of wildfires by its transmission system. The utility made power cuts - affecting nearly 2 million people at peak - after the National Weather Service declared a “Red Flag Warning” for much of the utility’s service area (depicted in the graphic below). The region saw relative humidity of less than 10% and wind gusts exceeding 40 mph. The Desert Sun reports Southern California Edison (SCE) also cut power to more than 20,000 customers due to wildfire risk last week.

High winds can bring trees and other vegetation into contact with electric transmission equipment causing sparks and triggering wildfires. When mixed with low humidity, a wildfire can easily and quickly grow out of control. Such was the case in the Camp Fire, California’s deadliest and most destructive wildfire on record, which killed 86 people and destroyed more than 18,000 structures. Because state law holds utilities responsible for wildfire damage when their equipment sparks fires (even when a utility is not negli-gent), PG&E was forced to declare bankruptcy after facing billions in liability claims for its role in causing the Camp Fire and other serious fires. Understandably, California utilities are now especially keen to avoid wildfire risk – all three Investor owned utilities (PG&E, SCE and SDG&E) routinely consider pre-emptive blackouts.

Nonetheless, consumers and the state government are responding to the state’s largest pre-emptive power cuts with frustration. Governor Gavin Newsom accuses PG&E of neglect and mismanagement; he’s calling on PGE to issue $100 credits to affected resi-dents and $250 credits to affected small businesses. PG&E defended its actions in a public statement but CEO Bill Johnson acknowledged “we fell short of our commitment to serving our customers.” The utility points out that no wildfires were sparked during the blackouts while more than 100 “instances of [electrical equipment] damage” oc-curred and wind gusts exceeded 50 MPH in 16 counties served by the utility.

Aside from electrical blackouts, California Direct Access customers may have been affected by increased price volatility as PG&E cycled large portions of the grid on and off – real time prices spiked above $120 / MWh last week as power was being restored. Further, PG&E’s aggressive action may have prevented new wildfires but has reignited debate on utility liability, government oversight, and our dependence on an ever sprawl-ing electrical grid.
 

 

 

 

Previous Weekly Market Reports: Archive

 

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.