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Industry News (415)

Saturday, 15 February 2014 15:16

GAS PRICES

Prompt month gas (March Contract) shot up this week 9%, or $0.44 (44 cents / mmbtu).  The 12, 24, and 36 month strips were all relatively flat.  There still has yet to be a meaningful correction to this current winter run-up.  Customers should also take note that the spread between the near term (12 month) and longer term (2 and 3 year) has widened significantly.  Recall that this pattern of higher short term pricing is called backwardation, a sharp contrast from the more normalized contango patters.  Contango is the more traditional look when longer term prices trend up, reflecting the storage (hold) costs over time as well as inflation.  This week’s 12 month contract settled at $4.67 / mmbtu, the 24 month contract settled at $4.40 / mmbtu, and the 36 month contract settled at $4.30 / mmbtu.  This all translates to higher costs to lock in your rate and protect yourself against this kind of market volatility, or higher variable rates for customer’s power and gas service.  Lesson to be learned is to lock your power and gas contract early, and protect yourself against these adverse market conditions.  Be sure to contract with a reputable supplier with the balance sheet and expertise to weather the storms in the wholesale markets, and honour their fixed price commitment to you.
New gas storage levels came out on February 13, for the week ending February 6. The data showed 1,686 Bcf of gas in the system, a drawdown of 237 Bcf relative to the prior week. Can gas in the system really drop below a 1,500 technical level?  If cold weather persists you bet it can.  Before this winter’s cold weather, storage levels were consistently above 3,000.  The prior year’s report ending the same week showed 2,549 Bcf in the system, so the levels have come down 34% vs. the comparable period a year ago. That is a material decline and it shows the effects that cold temperatures can have on the demand of natural gas.  Current storage levels are 27% below the 5 year average.

Saturday, 08 February 2014 17:37

GAS PRICES

While prompt month gas (March Contract) fell this week $0.17 (17 cents / mmbtu), the 12 month, 24 month, and 36 month strips were all up from $0.08 (8 cents / mmbtu) to $0.03 (3 cents / mmbtu).  The volatility and meteoric rise in the gas market caused by cold weather has yet to make a meaningful correction.  Customers should also take note that the spread between the near term (12 month) and longer term (2 and 3 year) has widened significantly.  Recall that this pattern of higher short term pricing is called backwardation, a sharp contrast from the more normalized contango patters.  Contango is the more traditional look when longer term prices trend up, reflecting the storage (hold) costs over time as well as inflation.  This week’s 12 month contract settled at $4.60 / mmbtu, the 24 month contract settled at $4.38 / mmbtu, and the 36 month contract settled at $4.29 / mmbtu.  This all translates to higher costs to lock in your rate and protect yourself against this kind of market volatility, or higher variable rates for customer’s power and gas service.  Lesson to be learned is to lock your power and gas contract early, and protect yourself against these adverse market conditions.  Be sure to contract with a reputable supplier with the balance sheet and expertise to weather the storms in the wholesale markets, and honour their fixed price commitment to you.
New gas storage levels came out on February 6, for the week ending January 31. The data showed 1,923 Bcf of gas in the system, a drawdown of 262 Bcf relative to the prior week. This drop represents another technical level (2,000) that has been broken this winter season.  Before this winter’s cold weather, storage levels were consistently above 3,000.  The prior year’s report ending the same week showed 2,701 Bcf in the system, so the levels have come down 29% vs. the comparable period a year ago. That is a material decline and it shows the effects that cold temperatures can have on the demand of natural gas.  Current storage levels are 22% below the 5 year average.

Saturday, 01 February 2014 19:32

GAS PRICES

While prompt month gas (March Contract) fell this week almost $0.25 (25 cents / mmbtu), the 12 month, 24 month, and 36 month strips were all flat.  The volatility and meteoric rise in the gas market caused by cold weather has yet to make a meaningful correction.  The forward curve continues to be backwardated, meaning near term gas contracts are more expensive than the longer term contracts.  This week’s 12 month contract settled at $4.52 / mmbtu, the 24 month contract settled at $4.33 / mmbtu, and the 36 month contract settled at $4.26 / mmbtu.  This all translates to higher costs to lock in your rate and protect yourself against this kind of market volatility, or higher variable rates for customer’s power and gas service.  Lesson to be learned is to lock your power and gas contract early, and protect yourself against these adverse market conditions.  Be sure to contract with a reputable supplier with the balance sheet and expertise to weather the storms in the wholesale markets, and honor their fixed price commitment to you.
New gas storage levels came out on January 30, for the week ending January 24. The data showed 2,193 Bcf of gas in the system, a drawdown of 230 Bcf relative to the prior week. Customers should note that storage has fallen below the 2,500 technical indicators, and even break below the 2,000 indicator by next week.  Before this winter’s cold weather, storage levels were consistently above 3,000. The prior year’s report ending the same week showed 2,830 Bcf in the system, so the levels have come down 23% vs. the comparable period a year ago. That is a material decline and it shows the effects that cold temperatures can have on the demand of natural gas.  Current storage levels are 17% below the 5 year average.

Saturday, 25 January 2014 20:34

GAS PRICES

Once again the cold weather being experienced through most of the country has not only caused chaos with airline travel, but also in the commodity markets which everyone pays for through higher electricity and gas prices.  The best way as a consumer can manage these price shocks is with a fixed price power and gas contract.  The biggest question is when to lock in your rates.  Locking in today does not make sense given the high volatility in the markets.  The window has closed if you have not taken advantage of signing up for a fixed price product yet, and customers should wait for the markets and the weather to stabilize.  If you are still on a variable price plan, you will be sure to feel the impacts in your upcoming electric bills.  On Friday January 24th, the prompt month (February 2014) contract blew through the $5.00 mark, settling at $5.18 / mmbtu.  This week say the prompt month increase more than $0.85 (85 cents), or almost 20%!  The 12 month strip this week was up $0.34 (34 cents), 24 month strip was up $0.21 (21 cents), and the 36 month strip was up $0.15 (15 cents).  Cold weather has had a particularly nasty impact in the New England markets, with natural gas being unavailable to fuel fossil power plants, and creating a supply / demand imbalance with electricity.  Market conditions have fallen into backwardation once again, meaning short term prices are higher than longer dated contracts.
New gas storage levels came out on January 23, for the week ending January 17. The data showed 2,433 Bcf of gas in the system, a drawdown of 107 Bcf relative to the prior week. Customers should note that storage has fallen below the 2,500 technical indicators. The impact of cold weather causing homes and businesses to draw down fuel in the storage systems has been significant. The prior year’s report ending the same week showed 3,021 Bcf in the system, so the levels have come down 20% vs. the comparable period a year ago. That is a material decline and it shows the effects that cold temperatures can have on the demand of natural gas.  Current storage levels are 13% below the 5 year average.

In what has become a recurring pattern for New England, shocks to the electrical system due to unavailable natural gas are having significant effects on price.  Customers choosing to rate lock their energy rates with a fixed price plan should be immune to these conditions.  Customers who stay on variable rate plans will see significant increases in the rates they pay for their residential and commercial electricity service.
Copyright 2010-13 EnergyChoiceMatters.com
 Reporting by Paul Ring • This email address is being protected from spambots. You need JavaScript enabled to view it.

According to ISO-New England, about 75 percent of the region's natural gas electrical generation capability was not running Thursday, presumably due to limited gas supply and/or high prices, Public Service Company of New Hampshire said in a news release yesterday.

Although it was unclear what amount of this offline capacity was receiving capacity payments through New England's centralized capacity market, the sheer volume of gas-fired capacity which was offline inevitably suggests that some capacity with a capacity supply obligation was offline. This further demonstrates that mandating that load pay capacity suppliers on a forward basis for capacity, under the pretense of reliability, offers load no assurance that such capacity will actually be available to generate power when needed.

PSNH said that as a result of the offline capacity, its entire electricity generation fleet was in operation this week, "to help meet a critical regional energy demand resulting from the prolonged cold snap."

"Extremely low temperatures combined with insufficient pipeline capacity to satisfy New England's increased dependence on natural gas, have prompted regional energy administrator ISO-New England to take what may be an historic measure--asking PSNH to fire up all of its larger power-generating facilities at Merrimack Station in Bow, Schiller Station in Portsmouth, and Newington Station, as well as infrequently-used combustion turbine facilities at Merrimack Station, Lost Nation (Groveton), and White Lake (Tamworth), for an extended period of time. Several of the combustion turbines are powered by aviation 'jet' fuel," PSNH said.

"When market prices for natural gas spike during times of high demand, [PSNH Vice President - Generation, William] Smagula says PSNH's facilities provide ISO-New England with a lower-cost alternative, which benefits PSNH customers," PSNH said.

"There is no question that the New England system is severely stressed at the moment," Smagula said, "but our entire fleet continues to perform well and provide great value to New Hampshire customers, by keeping the lights on and costs stable."

"PSNH is the only New England utility that still owns and operates its power generation facilities, a diverse fleet that is not dependent on natural gas. The state-regulated power plants, including biomass, coal, oil and nine hydroelectric facilities, are jointly capable of generating 1,150 megawatts of electricity to the regional grid," PSNH said.

Copyright 2010-13 EnergyChoiceMatters.com
 Reporting by Karen Abbott • This email address is being protected from spambots. You need JavaScript enabled to view it.

Distributed Energy Financial Group LLC (DEFG) has released its 2014 Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS), which identifies the states that have the most active retail electricity markets in North America.

The 2014 ABACCUS Residential Scores and Rank are:
                       2014     2014     Prior
                      Score     Rank     Rank
Texas                   92        1        1
Alberta                 71        2        2
Pennsylvania            64        3        3
New York                61        4        4
Connecticut             55        5        5
Maryland                53        6        6
Maine                   52        7        9
Illinois                51        8        7
Massachusetts           49        9       11
Ohio                    49        9        8
New Jersey              46       11       12
Ontario                 45       12       10
District of Columbia    41       13       13
Delaware                36       14       14
New Hampshire           36       14       15
Rhode Island            31       16       16
California              29       17       17
Michigan                27       18       18


The ABACCUS scores and rankings are based on:

• Market structure, relating to the rights and responsibilities of the market participants

• Default service, relating to the design of the regulated retail electric service that is available during a transition period, and the impact of default service on competitive retail markets

• Transactions, relating to the day-to-day interactions where market participants buy and sell electricity and conduct business with one another

• Facilitation, relating to policies and rules that encourage retail energy providers as they interact with retail consumers and T&D utilities

• Performance, relating to outcomes which indicate whether the market has performed well

"Consumer-driven innovation and product differentiation should be the goal of restructuring; innovation indicates a shift from pure commodity sales to a vibrant retail energy services market," the ABACCUS report says.

Competitive retail energy providers in North America offer new products and services to 17.2 million households in North America, the ABACCUS report said.

According to the ABACCUS report, the number of residential customers taking competitive electric service is as follows:
Texas            5,854,000
Illinois         3,077,000
Ohio             2,106,000
Pennsylvania     1,877,000
New York         1,389,000
Connecticut        605,000
Alberta            542,000
New Jersey         536,000
Maryland           524,000
Massachusetts      399,000
Maine              214,000


As a percent of customers, the ABACCUS report lists residential migration to competitive electric service as follows:
Texas                     100.0%
Illinois                   68.5%
Ohio                       50.2%
Connecticut                43.5%
Alberta                    40.0%
Pennsylvania               37.7%
Maine                      28.0%
Maryland                   26.1%
New York                   24.0%
Massachusetts              16.9%
New Jersey                 16.0%
District of Columbia       14.6%

Saturday, 18 January 2014 21:55

GAS PRICES

Cold temperatures across the country took the gas futures into backwardation again, meaning shot term gas process were more expensive than the longer term contracts.  The prior week’s downturn was given right back this week meaning customers and variable rate plans will feel the pain of increased volatility, and increased pricing for power and gas products.  12, 24, and 36 month gas strips are all back up above $4.00, with the prompt month increasing $0.27 (27 cents), equating to a 6.3% pop.

New gas storage levels came out on January 16, for the week ending January 10. The data showed 2,530 Bcf of gas in the system, a drawdown of 287 Bcf relative to the prior week. Customers should note that storage has fallen below the 3,000 technical indicators. The impact of cold weather causing homes and businesses to draw down fuel in the storage systems was significant in the early part of the winter season. The prior year’s report ending the same week showed 3,189 Bcf in the system, so the levels have come down 21% vs. the comparable period a year ago. That is a material decline and it shows the effects that cold temperatures can have on the demand of natural gas.  Current storage levels are 15% below the 5 year average.

Saturday, 11 January 2014 17:21

GAS PRICES

The first full week of trading in 2014 saw a big market correction. The 12 month strip fell below the $4.00 technical level, and markets have come back to the more traditional contango shape, meaning the shorter duration curve has fallen below the longer dated contract months. The impact of colder winter temperatures has had an impact on the short term natural gas prices, making them more expensive than the longer term contract months. The prompt month gas contract fell $0.25 (25 cents) this past week, and the 12 month curve settled at $3.99 which was also off $0.25 (25 cents) for the week. The 24 and 36 month curves were just over $4.00. This correction should translate to lower risk premiums built into fixed price products, so customers should look once again to lock in their rates.

New gas storage levels came out on January 9, for the week ending January 3. The data showed 2,817 Bcf of gas in the system, a drawdown of 157 Bcf relative to the prior week. Customers should note that storage has fallen below the 3,000 technical indicators. The impact of cold weather causing homes and businesses to draw down fuel in the storage systems was significant in the early part of the winter season. The prior year’s report ending the same week showed 3,345 Bcf in the system, so the levels have come down 16% vs. the comparable period a year ago. Current storage levels are 10% below the 5 year average.

January 6, 2014

Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • This email address is being protected from spambots. You need JavaScript enabled to view it.

With cold temperatures and high electric use this morning, the Electric Reliability Council of Texas (ERCOT) has announced an Energy Emergency Alert and has implemented the first two stages of its steps to protect the grid.

"We have brought on all available electric generation and have deployed all demand response programs that have contracted with ERCOT to reduce electric use in emergency situations," said Dan Woodfin, ERCOT director of System Operations. "Conditions appear to be improving at this time, and we do not expect to implement rotating outages this morning."

LMPs appeared to hit the $5,000 cap early this morning, at the interval 07:00 local time, among others.

Most ERCOT LMPs at 08:20:10 local time were in excess of $700; the highest we saw in a quick scan appeared to be just under $1,300. 

Saturday, 04 January 2014 16:12

GAS PRICES - A Year in Review

Greetings all, and happy new year to you. The PMR team would like to extend best wishes for 2014. We are very excited and working hard to commercialize our program offering competitive rates on power and gas, leading customer service, and unique ancillary offerings that make us different from other retail energy suppliers.
While we traditionally have blogged to give our customers perspective on the previous week’s market fundamentals, we would like to take this opportunity to digest the year’s market movement. While supply and demand of natural gas continue to drive the energy markets in each location, weather has proven to account for increased volatility, risk, and at the end of the day, price.
Natural gas storage levels have come down. Cold weather this past winter, and to a lesser extent heat waves that occurred in the summer have led to draws on storage across the system. While ample supplies remain due to the recent shale gas boom across North America, the product remains in the ground, not in the storage system.
The slope of the forward curve of natural gas futures has been steep for the past two months. Even more apparent is the backwardation effect this has caused in the forward curve, meaning short term rates are more expensive than long term rates. This is being driven by the cold weather that many deregulated electricity and gas markets are seeing. Gas is being used to heat homes and businesses. The increased demand is translating to some of the highest electricity prices seen in 2013. Energy supply companies are challenged with managing the higher cost wholesale power they need to balance the energy they are required to supply their customers.
Those customers who chose not to lock in their power and gas rates are seeing the effects in higher electricity and gas costs. Those customers who chose to lock their rates are benefiting from stable rates they wisely chose to lock in.
We at PMR advise our customers and followers on a variable price product to continue to float. Locking in your rates in today’s market conditions will prove to be expensive. The cold weather will pass, and rates will stabilize.
Please stay warm and be safe. The weather is causing much uncertainty and volatility in markets we serve, but it is also leading to dangerous conditions. Remember to check the pipes in your residences. Busted pipes from the intense cold conditions can lead to all kinds of flood and many other problems. Be careful with furnaces, and make sure they have been serviced properly to ensure safe heating of your homes and business.

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