In late August, we wrote that while the result of the Presidential election will have a significant impact on Federal energy policy, it will not materially affect energy prices. We now have a somewhat clearer understanding of Vice President Harris’ energy policy, and we continue to maintain that while several Biden climate initiatives are at risk, the election will not significantly impact near-term energy prices. In fact, as recently noted by The Economist, “Green subsidies will probably survive Mr. Trump’s re-election, and Big Oil will probably do just fine under Ms. Harris.”[1]

Below, we break down a few of these key energy policies and explain why most are not actually in play.

As we approach the end of August, the focus of the summer typically begins to shift towards things like kids returning to school, parents seeking a more normal schedule, the excitement and optimism of each football team’s upcoming season, and hopefully milder temperatures across our power grids.

Given this, we thought it would be appropriate to give a quick update of how the summer has played out so far, by region and commodity (gas and power).

The departure of President Biden and the nomination of Vice-President Harris challenges anyone predicting the impact of the 2024 election on energy policy. Unlike President Biden or former President Trump, both of whom have clear track records on energy policy, Vice-President Harris has said almost nothing to-date about her administration’s approach to the energy market or climate change. In her speech accepting the Democratic Party’s nomination, Vice-President Harris did not use the word “energy,” and there was only a single reference to climate change – that we need “[t]he freedom to breathe clean air, and drink clean water and live free from the pollution that fuels the climate crisis.” President Trump’s stance on energy-related policies is better known, and we expect his administration will take regulatory action to help coal, natural gas and nuclear power to better compete with renewables.  Notwithstanding this policy shift, our view is that a second Trump administration will not have any significant effect on near-term energy prices. Electricity and natural gas market fundamentals and the overall balance of supply and demand will likely be the main drivers of energy prices over the next six to twelve months regardless of who wins the election in November. 

The good news is that we now know the price of capacity through May 2026. The bad news is that capacity prices have increased by approximately 5x over the last auction. The surge in price was fueled by power plant retirements, rising regional demand, and regulatory requirements seeking to address the participation of renewables and how much capacity they can provide during periods of system stress. Before examining the details of this latest auction, it’s important to review how the capacity market got to where it is today. As a refresher, the PJM Interconnection operates the largest competitive wholesale electricity market in the United States, serving 65 million people across 13 states and the District of Columbia as shown in Figure 1. Its primary function is to coordinate the flow of power and develop market rules such that the system operates reliably and safely. A critical component of PJM's operations is its capacity market, which ensures long-term reliability by securing sufficient resources to meet future electricity demand.  

DALLAS, July 16, 2024

Industry veteran Tracy Hodge joins 5, a leading energy advisory firm in North America, as Senior National Energy Advisor.

5 is pleased to announce that industry veteran Tracy Hodge has joined the company. Tracy brings an impressive background spanning nearly two decades in the retail energy sector to her new role at 5. Prior to joining 5, Tracy managed the Interactive Energy Group (IEG) brokerage business, where she drove significant growth and innovation. IEG is a wholly owned subsidiary of Just Energy. She also held key roles at Ambit Energy and Save On Energy, developing strategic partnerships and leading product marketing initiatives that substantially enhanced customer experiences and business profitability.