Weekly Energy Market Updates by Region




Issue week: April 7th, 2022  (Wk 14)





WEST  Throughout this first week of April, Day Ahead prices have been strong in the nightly ramp amid a heatwave along the West Coast. Today, they peaked at $213/MWh in SP15 during the nightly ramp as old and inefficient natural gas plants with a high heat rate were dispatched to meet peak demand. Ongoing macro issues stemming from the war between Russia and Ukraine continue to lift the forward curve for NYMEX and, in turn, all of the regional trading hubs.

ERCOT  Volatility has returned to the real-time market this week; 7x24 prices have averaged between $35/MWh and $75/MWh, depending on the zone. Prices have been highest in the Houston and South Load Zones and lowest in the West. Strong loads early in the week due to above-average temperatures plus strong wind generation in the West and seasonal line and plant outages yielded significant congestion to raise prices across some zones. These conditions are likely to continue at times over the next several weeks as strong loads and wind generation are projected to persist. The term market has been equally unstable as natural gas prices have kept rising dramatically since last week. Accordingly, prices for BY22 are up by $5/MWh from last week while CY strips down the curve are $1-$2/MWh higher.

EAST Prices are starting to level out again. Day Ahead is averaging in the mid-to-high $50s/MWh in the main hubs. Real Time is showing a bit more of a spread with averages between $45/MWh and $62/MWh. The largest DART spread is in ISO-NE’s Mass Hub, where Real Time is almost $6/MWh lower than Day Ahead. The weak Real Time figures are attributable to unexpectedly low demand. In response, generators have needed to curtail; prices actually went negative in some hours.


The EIA reported Thursday morning that, for the week ending April 1, U.S. inventories decreased by 33 Bcf, 10% more than the expected withdrawal of 30 Bcf. Total stockpiles now stand at 1,382 Bcf, down by 22.4% from a year ago and 17.1% below the five year average for the same week.

As of 12:00 p.m. PDT, the NYMEX Henry Hub prompt month of May was trading at $6.339/MMBtu, $0.310/MMBtu higher than yesterday’s final and a whopping $0.697/MMBtu above the closing price last Thursday. Now that the $6/MMBtu ceiling has been busted, $6.50/MMBtu and higher are bound to be the next stop if the bulls have their way.

















Reports of the death of nuclear power have been greatly exaggerated. The World Nuclear Association stated last month that, in 2020, the 93 operable nuclear reactors in the U.S. were responsible for 19.7% of all electricity generated in the country. Viewed against the report from last July by the U.S. Energy Information Administration that all renewable sources of energy together accounted for a comparable 21% of U.S. electricity during the same year, that tidbit makes clear that nuclear energy is not nearly as unwelcome or uncommon as many might suspect. However, its future is not necessarily so bright.

Despite broad acknowledgment of nuclear energy as a clean energy option, its reliance on the finite supply of uranium available on Earth rules it out as renewable. Consequently, it is usually excluded from many state and federal renewable energy incentives and associated voluntary credit programs. Some states have tried to keep their nuclear plants viable through the use of zero emission credits. Nonetheless, falling electricity prices have overcome such efforts and contributed to the recent shutdown of three such facilities in 2020 and 2021, according to the June 2021 report by the Congressional Research Service titled U.S. Nuclear Plant Shutdowns, State Interventions, and Policy Concerns.

As electricity prices keep dropping, more nuclear reactors can be expected to close, and the trend could not be more inconvenient. If the Biden Administration manages to enact the Clean Future Act and other anticipated environmental commitments for the U.S., carbon-sourced electricity will become even more of a pariah than it already is, yet, as the U.S. energy industry continues to abandon coal, economic priorities have tended to steer it toward natural gas instead. National Geographic Society explains that natural gas does emit fewer greenhouse gases than coal, is easy to store and transport, and is domestically abundant. Still, natural gas is another fossil fuel (albeit a relatively clean one) that emits carbon, begging the questions of whether and how renewable energy alone can make the U.S. reach its environmental targets as long as it is the prevailing fuel source.

Meanwhile, nuclear power is an emission-free (post-mining) resource with immense capacity, and the graph below from the International Energy Agency shows that its global presence was still considerable as recently as three years ago. The implementation costs of nuclear plants are admittedly high, but stakeholders placing all of their proverbial eggs in the renewable-energy basket may be missing an opportunity to help their cause by making that investment in nuclear energy now instead of rebuffing the option altogether.





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