What is the Jones Act and how does it impact our energy markets?

In January 2018 a cold snap descended across the Northeast. And in Boston Harbor, a liquified natural gas (LNG) tanker appeared on the horizon, ready to unload its cargo at the only port terminal in the lower 48 states equipped to process imported gas. The massive ship flew a red, white, and blue flag, but not that of the United States. Instead, it was the flag of the Russian Federation. The ship is called the “Gaselys” which, in the Russian language, translates to “extinguished” and it carried natural gas sourced from the Yamal Peninsula in Siberia. The owner of the LNG export terminal in Russia from where this ship set sail is Novatek, Russia's largest independent producer of natural gas. This is the same company that was put under sanctions by the US Treasury Department in 2014 after Russia invaded and seized Crimea from Ukraine. And while the company was sanctioned, the natural gas that it sold to New Englanders was not.

What is causing global forces to outweigh the domestic signals for natural gas prices?

If you still buy into the old trader’s tale of “buy natural gas in the fall and spring when it is cheaper” it’s likely that your energy purchasing strategies are as unlucky as your March Madness bracket. Last fall we saw one of the largest natural gas rallies in recent history as European and Asian storage levels were depleted and international LNG prices reached record highs. Now, at the beginning of spring, when natural gas withdrawals from storage are starting to dwindle and the country normally shifts to producing more natural gas than it consumes, we are again looking at another significant market rally, with April’s NYMEX contract settling at the highest price for any April delivery since 2008.

A current look into the market drivers and prices throughout PJM

PJM, the largest wholesale electricity market, covering 13 states including the District of Columbia, and serving a whopping 65 million people, is certainly feeling the impact of increased market costs. Consider that wholesale electricity for calendar year 2023 in PJM West was trading at its all-time low at the beginning of the Covid-19 pandemic in March 2020, below $25 per MWh. Now, as of March 28, 2022, calendar year 2023 is trading at its all-time high above $55, an increase of over 100%. What is driving this 2X increase in the last 24 months and the monumental upward movement in the last 8 months, as seen in Figure 1?

Why are power prices increasing throughout New York?

Like many other commodities, the price of wholesale electricity has drastically increased over the last 12 months nationwide. In the middle of March 2021, the wholesale price of electricity purchased for calendar year 2023 in NYC was trading at $35.60/MWh. Today, as shown in Figure 1, that calendar strip is trading at $67.89/MWh. The same dramatic rise in energy prices has occurred in Upstate New York as well. The wholesale price for electricity in calendar year 2023 has increased from $24.57/MWh to $42.97/MWh over the last year.

How is the Situation in Ukraine Impacting Global and Domestic Natural Gas Markets?

On February 21, 2022, Russia declared that the Eastern Ukrainian regions of Donetsk and Luhansk were independent territories while simultaneously stating those territories were in need of Russian security forces. While this declaration and escalation did not surprise many, it prompted a number of questions and concerns around the short-term and longer-term risks to international and domestic energy markets. Russia’s full-scale invasion of Ukraine on February 23, 2022, caused international energy prices to become more volatile during overnight and intraday trading. However, West Texas Intermediate (WTI) crude prices for April delivery closed on Thursday up only around 70¢ per barrel compared to Wednesday’s closing price. Friday’s trading session also saw a slight sell-off, with prices closing around $91.50 per barrel. European natural gas futures had a stronger reaction. The large European Liquified Natural Gas (LNG) trading hub, the Dutch Title Transfer Facility (TTF) rallied up to €132/MWh (about $43USD/MMBtu) before settling down closer to $30USD/MMBtu on Friday.

A Two-Year Pause on Solar Projects in PJM

The geographic area served by the PJM Interconnection spans from Virginia all the way to northeast Illinois. And despite the name of the hit show, “It’s Always Sunny in Philadelphia”, this is not a particularly sunny part of the country. It may be a surprise, then, to learn that PJM is overwhelmed by applications for new solar farms. In fact, PJM is proposing a two-year pause on reviewing new generation projects (most of them solar) that seek interconnection with its power grid to slow the influx.

An In-depth Comparison of Winter Storm Landon Versus Winter Storm Uri

Earlier this month, the first big test of the post-Uri Texas electrical grid was blowing south across the plains. Many had legitimate concerns given the forecasts of freezing rain in West and North Texas, along with sub-freezing temperatures as far south as San Antonio. Temperatures in Houston were even forecasted to be below 30ºF for several hours in the morning on Friday, February 4th, and Saturday, February 5th.

Higher Delivery Rates on the Way with Con Edison's 2022 Rate Case

ConEdison, the largest investor-owned utility (IOU) in the state of New York, has an obligation to its investors to operate profitably year-over-year. Doing so can be a challenge due to changing operating conditions like the COVID-19 pandemic, prolonged cold snaps like the Polar Vortex of 2014, or new climate-driven policy mandates for large-scale electrification powered by renewable sources that have yet to be developed. To ensure profitability, a formal process known as a Rate Case is undertaken annually to evaluate if the utility is adequately charging electricity and natural gas customers for its services.

Conserve Power and Prepare for Potential Outages

What are the Drivers of Natural Gas Production and Pricing?

The dramatic changes in demand for many commodities over the past 24 months have wreaked havoc on supply chains across the world - energy markets are no exception. When demand for oil and gasoline tanked in the spring of 2020, oil prices fell to record lows, with near-term delivery prices even going negative. Natural gas prices did not fare much better, with spot prices during the summer and fall of 2020 setting new 25-year record lows. Producers of both oil and natural gas quickly reacted to those price signals, and production of both commodities began to drop as capital expenditures quickly ceased.