PJM:

Temperatures throughout the northeastern U.S. are expected to approach or exceed 90°F this afternoon, driving electric demand close to 2020 summer highs.

New York City’s Local Law 33/95 will require building owners to post their Energy Efficiency Rating Label in the next 90 days. In December 2017, the New York City Council passed Local Law 33/95, requiring building owners to post this label in a conspicuous location near each public entrance. This is required for all buildings over 25,000 square feet that are listed on the 2020 Covered Buildings List for benchmarking compliance. The intent of this law is to provide transparency into a building’s energy usage and efficiency.

NYISO:

Temperatures in New York City are expected to remain in the mid-90s throughout Monday. Even though precipitation is likely in the 7-10 day range, it is expected that Monday (7/27) will approach the year-to-date system peak of 29,979 MW which was set last Monday (7/20).

A high-pressure system has settled over the Midwest and Mid-Atlantic which will keep temperatures elevated today and tomorrow. These high temperatures will result in PJM and NYISO electric grids being pushed to the max. In NYISO, peak load of more than 29,933 MW is expected beginning at 4:00 PM today. Between 3:00 -5:00 PM, load is forecast at or above 29,700 MW, vs the current 2020 peak of 28,867 MW.

It is important to note that load this morning is coming in ~600 MW higher than yesterday’s projections, which reflects how warm it is in the New York region today. Temperatures in New York City are expected to exceed 95 degrees. 

It appears the fireworks have come early this year as several markets are facing medium to high threats for Coincident Peaks (“CPs”) today and into the early part of next week.

A fixed price electricity contract is the most common product selected by commercial clients throughout the deregulated markets in the US. And while the cost of the energy (the electrons moving through the wires) is the often the largest and most volatile part of a retail electricity price, there are several other electricity cost components that are built into that retail price.

May 2020 it is likely to be the 5^th month in a row where Real-Time LMP (spot) prices in New York City (NYISO Zone J) have settled at their lowest levels in ten years. Figure 1 shows the monthly settlement price in Zone J from 2011 to 2020. Note that the first five months of 2020, shown in the dark green line, are less than all other monthly settlement prices. 

There is often both good and bad news anytime commodity markets are volatile.

The bad news:

Earlier this month, the NYISO  (the entity in charge of economically maintaining the electricity system in New York) completed the first two of three capacity auctions that ultimately set the price paid for capacity in the coming summer months (May – Oct 2020).  Many were anticipating higher summer capacity prices (especially in New York City) from this month’s auction given how high forward capacity prices have been.  Historical capacity prices for New York City and the rest of New York State are shown in Figure 1. 

In light of the impact of the Coronavirus on business operations, we are sharing information about Coronavirus and Contract Disputes circulated by the law firm Sidley & Austin.  It provides a high-level summary of the force majeure issues raised by the spread of this illness.  If your electricity and/or natural gas usage has or will be significantly affected by the spread of the Coronavirus, you should seek legal advice to determine if it is appropriate to provide a force majeure notice to your energy supplier.  As discussed in the document, the relevant electricity or natural gas contract provision may require “prompt” notice of the force majeure event.

Over the past month, there have been a few regulatory developments that will affect generators, their amount of generating capacity and the cost of that capacity throughout New York State.  Recently, the Federal Energy Regulatory Commission (FERC) issued several rulings related to the ways subsidized renewable generating assets will be able to participate in future NYISO capacity auctions.  These rulings place limits on the way generation from subsidized assets, such as wind farms, solar arrays and battery storage resources, can take part in New York’s capacity auction process.  Furthermore, New York State placed additional emissions restrictions on natural gas and oil-fired assets that run during periods of peak electricity demand on the grid.