Energy Market Update
Weekly Energy Industry Summary
Commodity Fundamentals
Week of January 13, 2025
By The Numbers:
NG '25 prompt-month NYMEX settled at $3.93/MMbtu, down $.06/MMbtu, on Monday, January 13.
WTI '25 prompt-month crude oil settled at $78.82/bbl., up $1.25/bbl., on Monday, January 13.
Natural Gas Fundamentals - Neutral/Bullish
Prompt-month NYMEX natural gas futures settled at $3.93 per MMbtu, down $.06 per MMbtu on Monday, January 13.
Cold temperatures and winter storms through the eastern half of the country are supporting the natural gas market during the coldest month of the year.
The weather models favor cold air moving through the eastern half of the country over the next two weeks with a milder start to February. However, the pattern for February leaves open the ability for cold air in Canada to move south during the month.
Several larger-than-average storage withdrawals will begin to rebalance storage inventories to a more "supportive" of-current-pricing-action mode.
Electric power generation demand for gas, month-to-date, averaged 37.3 Bcf per day versus 36.9 Bcf per day for the same period last year.
LNG exports month-to-date averaged 15.0 Bcf per day versus 14.4 Bcf per day for the same period last year.
The newly minted Plaquemines LNG Export Terminal commenced operations this week. Feedgas deliveries to the new facility were 1.1 Bcf per day this morning.
Natural gas strip prices, 2026-2030 are; $3.94, $3.79, $3.70, and $3.57 and $3.49 per MMbtu respectively.
It's all about the weather. If winter stays put longer -- gas prices hold and gain. If winter goes away quickly -- gas prices soften. It is becoming apparent that the U.S. is having what amounts to a "normal" winter for the first time in over a decade.
Crude Oil - Neutral/Bullish
NYMEX (WTI) crude oil futures settled at $78.82 per barrel on Monday, January 13, Up $1.25 per barrel.
The U.S. imposed its most aggressive and ambitious sanctions yet on Russia's oil industry last week, targeting large exporters, insurance companies, and more than 150 tankers.
This round of sanctions provided some upward price action over the past few days.
These sanctions could take 700-800 thousand barrels per day of crude oil off the market.
China demand for oil in 2024 fell for the first time in 20 years, Reuters reports.
Soft demand from China has kept crude prices in check.
Economy - Neutral
The U.S. added 256,000 jobs in December.
The St. Louis Fed's Alberto Musalem suggests greater caution is warranted on reducing interest rates.
U.S. consumer confidence clouded over a bit this month after views of the economy weakened on expectations of higher inflation.
U.S. mortgage rates are back at their highest level since last summer, frustrating home buyers waiting for a break from some of the steepest borrowing costs in more than a decade.
Senate confirmation hearings begin today for president-elect Trump's cabinet candidates begin today.
Weather - Bearish
The models are in relative agreement through the 11-15 day period.
The eastern cold shot of this week is followed by a warm-up over the weekend.
Next week, a new shot of very cold air moves out of the Rockies eastward.
This chunk of cold air begins to move out during the latter period of the 11-15 day period.
The latest models do warm up from current temperature levels in early February, however, there is a supply of cold air in Canada available to move south.
Weekly Natural Gas Report:
Inventories of natural gas in underground storage for the week ending January 3, 2025 are 3,373 Bcf; a withdrawal of 40 Bcf was reported for the week ending January 3, 2025.
Gas inventories are 207 Bcf greater than the five-year average and 3 Bcf less than the same time last year.
Values reflect week ending January 10, 2025.
Prices reflect week ending January 10, 2025.
Weekly Power Report:
Prices reflect week ending January 10, 2025.
Prices reflect week ending January 10, 2025.
Mid-Atlantic Electric Summary
The Mid-Atlantic Region’s forward power prices have been relatively stable over the past month despite the onset of colder than normal temperatures this month thus far. Natural gas prices have moved-up steadily as recent production freeze-offs, dwindling storage inventories and higher peak demand has driven prices up over $4.00/MMBtu earlier this week, before retreating back below that price level. The eastern cold shot of this week is followed by a warm-up over the weekend. A storm coming across the Pacific Northwest will tap into Arctic air in northern Canada and bring it southward into the Rockies this weekend, then move across the Mid-con and eastern half of the nation next week. Future power prices from Bal’2025-2029 were on par with no real changes across the average for the term. The near-term prices saw weather-driven increases with natural gas prices, while the back-end of the price curve saw declines. Index prices have been higher this month with the cold. The month-to-date index prices in West Hub for January are averaging $48.66/MWh, which is 28% higher than last month, but on par with a year ago. The West Hub average day-ahead settlement price for 2024 was $33.74/MWh or 2% higher than the 2023 average.
FERC Rejects PJM and Transmission Owner Effort to Expand Control – On 12/6, FERC rejected attempts by PJM and the Transmission Owners to expand PJM’s rights to make changes to its transmission planning rules without stakeholder approval. Under the PJM Operating Agreement, changes to transmission planning rules can be proposed by PJM under section 205 of the Federal Power Act (FPA) only with stakeholder approval. Without that approval, changes must be proposed under FPA section 206, which requires PJM to first demonstrate that the current planning rules have become unjust and unreasonable and unduly discriminatory. The Transmission Owners have complained for years that this has led to inefficient and ineffective transmission planning. PJM agreed and filed a complaint earlier this year asking FERC to find that its lack of FPA section 205 filing rights over transmission planning rules hinders its ability to plan the transmission system. PJM also noted that it is the only RTO in the region that does not have such rights over its planning rules and submitted a companion filing that would have moved the planning rules into the PJM Tariff thereby granting 205 filing rights to PJM like other RTOs. State commissions and consumer advocates opposed various aspects of PJM’s filings, raising concern regarding PJM’s attempts to elevate the Transmission Owners’ interests over other stakeholders.
FERC rejected PJM’s complaint and companion filing, finding that PJM did not substantiate its claims with evidence that its transmission planning process is not working effectively and that FERC review of potential changes under FPA section 206 provides PJM sufficient opportunity to address problems that might arise. FERC also concluded that the changes requested by PJM would give the Transmission Owners inappropriate influence or control over certain PJM filings and that it is not discriminatory for the PJM members that formed the RTO to have given members the right to review and approve potential changes to transmission planning rules. Commissioner See did not participate in the order and Commissioner Christie concurred in the result. Christie agreed with PJM that the RTO should have the ability to propose changes to transmission planning rules under FPA section 205 even without stakeholder agreement but supported rejection of the complaint because the companion filing, in Christie’s view, sought to limit the ability of PJM to plan regional projects that could be more efficient or cost-effective than local projects planned by the Transmission Owners. Rejection of PJM’s complaint and companion filing is a significant loss for the Transmission Owners, who have prioritized obtaining more rights over planning rules for several years.
Great Lakes Electric Summary
The Great Lakes Region’s forward power prices have been relatively stable over the past month despite the onset of colder than normal temperatures this month thus far. Natural gas prices have moved-up steadily as recent production freeze-offs, dwindling storage inventories and higher peak demand has driven prices up over $4.00/MMBtu earlier this week, before retreating back below that price level. The eastern cold shot of this week is followed by a warm-up over the weekend. A storm coming across the Pacific Northwest will tap into Arctic air in northern Canada and bring it southward into the Rockies this weekend, then move across the Mid-con and eastern half of the nation next week. Future power prices from Bal’2025-2029 were on par with no real changes across the average for the term. The near-term prices saw weather-driven increases with natural gas prices, while the back-end of the price curve saw declines. Index prices have been higher this month with the cold. The month-to-date index prices in COMED for January are averaging $30.57/MWh, which is 22% higher than last month, but -25% lower than a year ago, while those same settlement prices thus far in AdHub are averaging $40.05/MWh or 15% higher than last month but -7% lower than last year in January 2023.
FERC Rejects PJM and Transmission Owner Effort to Expand Control – On 12/6, FERC rejected attempts by PJM and the Transmission Owners to expand PJM’s rights to make changes to its transmission planning rules without stakeholder approval. Under the PJM Operating Agreement, changes to transmission planning rules can be proposed by PJM under section 205 of the Federal Power Act (FPA) only with stakeholder approval. Without that approval, changes must be proposed under FPA section 206, which requires PJM to first demonstrate that the current planning rules have become unjust and unreasonable and unduly discriminatory. The Transmission Owners have complained for years that this has led to inefficient and ineffective transmission planning. PJM agreed and filed a complaint earlier this year asking FERC to find that its lack of FPA section 205 filing rights over transmission planning rules hinders its ability to plan the transmission system. PJM also noted that it is the only RTO in the region that does not have such rights over its planning rules and submitted a companion filing that would have moved the planning rules into the PJM Tariff thereby granting 205 filing rights to PJM like other RTOs. State commissions and consumer advocates opposed various aspects of PJM’s filings, raising concern regarding PJM’s attempts to elevate the Transmission Owners’ interests over other stakeholders.
FERC rejected PJM’s complaint and companion filing, finding that PJM did not substantiate its claims with evidence that its transmission planning process is not working effectively and that FERC review of potential changes under FPA section 206 provides PJM sufficient opportunity to address problems that might arise. FERC also concluded that the changes requested by PJM would give the Transmission Owners inappropriate influence or control over certain PJM filings and that it is not discriminatory for the PJM members that formed the RTO to have given members the right to review and approve potential changes to transmission planning rules. Commissioner See did not participate in the order and Commissioner Christie concurred in the result. Christie agreed with PJM that the RTO should have the ability to propose changes to transmission planning rules under FPA section 205 even without stakeholder agreement but supported rejection of the complaint because the companion filing, in Christie’s view, sought to limit the ability of PJM to plan regional projects that could be more efficient or cost-effective than local projects planned by the Transmission Owners. Rejection of PJM’s complaint and companion filing is a significant loss for the Transmission Owners, who have prioritized obtaining more rights over planning rules for several years.
Northeast Energy Summary
As reported from the January 9th ISO New England COO report from the NEPOOL Participants Committee meeting, despite both elevated natural gas and power prices there were no major system issues to report in December. The average December natural gas price in the region jumped 3.9 times the November average of $1.86 to $9.13/MMBtu – this in turn drove the wholesale day-ahead index power price average to $87.56/MWh (vs. $37.28 in November). Average loads for the month were approximately 1 GW higher than December 2023 with the peak load for the month occurring on Sunday, December 22 Hour Ending 18 at a value of 19,030 MW. Also of note for the month, the ISO declared December 22 & 23 Inventoried Energy Days (from the Inventoried Energy Program) meaning the average of the high and low temperatures at Bradley Airport in Hartford, CT were 17 degrees F or less and resources participating in the program had to demonstrate their specific committed energy inventory by 8am or the respective following day or face loss of payments under the program. Net payment made to qualifying resources for the two triggered days amounted to $2.13 million - $1.75 million paid to the forward component resources and $383k paid to spot participants.
Recently, the New York Power Authority (NYPA) filed a petition with the state’s Public Service Commission (PSC) seeking approval to move forward with the transmission portion of the Clean Path project that was cancelled in early December. The Clean Path project was proposed as a 1,300 MW, 175-mile, underground transmission line set to begin commercial operation in 2027, delivering around 7.9 million MWh from upstate wind and solar facilities to New York City annually. Last month, the New York State Energy Research and Development Authority and the project developer announced the “mutual termination” of the project’s Tier 4 Renewable Energy Credit contract due to increased inflation and rising costs for key components. Clean Path, touted by Governor Hochul as a signature part of her environmental record, would have helped decarbonize New York City’s power supply and made it easier for building owners to meet the city’s stringent emissions standards. Assuming the PSC (and FERC) approves the NYPA petition, NYPA intends to hold a competitive solicitation for renewable project developers to supply the line and to allocate the estimated $5.2 billion cost of the transmission line across all ratepayers in the state, pending federal approvals. The project could potentially reduce congestion on the AC transmission system allowing for more clean and renewable power to flow downstate, supplying electricity to the city year-round and speed up the retirement of in-city fossil fuel plants. The petition by NYPA kicks off what could be a lengthy process at the PSC with additional approvals by FERC for cost recovery of the transmission line.
ERCOT Energy Summary
A cold front arrived in Texas last week, but it will turn out to be the warmup act to a bigger front arriving Sunday Jan 19th. Northern Texas saw overnight lows in the mid 20’s to low 30’s in Dallas while daytime highs were in the mid 30’s until the weekend when they got to the upper 40’s F. Houston saw overnight lows in the mid 30’s while daytime highs were in the mid 40’s F.
Mild weather is in front of us through the weekend ahead of a strong cold front. This chunk of arctic air is coming in farther west compared to previous cold shots this winter. This will bring cold air down the face of the Rockies into Texas early next week with some strong below normal temperatures with lows in the lower 20’s in Dallas and teens in the outlying areas, but some model guidance is a little colder. Houston falls into the middle and upper 20’s. The coldest period will be Monday through Wednesday, then we start to see a moderation in temperatures later next week and closer to normal for the 11-15 day.
Forward Calendar Price Review Last Week
ERCOT Wind & Real Time Prices (Load Zone SPP): ($/MWh) over Prior Week
The chart above shows solar and wind production (MW) on left axis vs. the ERCOT West Zone price both Day Ahead and Real Time in $/MWh on the right axis.
Source: ERCOT & Gridstatus.io/ERCOT dashboard
ERCOT Real Time Prices
Real time prices again were in the low $20/MWh across the North, Houston & South zones with the West clearing $39 as congestion drove higher pricing. On December 14th from 4-5 pm CT, prices averaged $466/MWh in the West zone while they ranged from $410 -474/MWh for the North, South and Houston zones on a day that saw low wind output.
Source: ERCOT
Net Load
Net load in ERCOT is defined as overall ERCOT system load less combined (solar & wind) output. The large build out in solar and wind capacity in ERCOT has led to variability in ERCOT net load and as the graph below illustrates, it can vary day to day. When the green line reaches the gray line, it indicates there are very little renewable capacity online.
Last week (January 7th – 14th) saw load that was in the mid to upper 60 GW range before declining to 50 GW January 12th. Moderate load and strong wind later in the week resulted in overall stable Real time pricing. We did see on January 8th at 6-7 am CT & 9th 8-9 am CT net load get within 3-4 GW of each other. This is typical of morning ramp hours and in higher load periods such as the cold weather event coming the week of January 20th, it could result in more real time volatility.
Source: GridStatus.io
Generator Outages:
Source: ERCOT & Grid Status
Outages have been rangebound from 12-15 GW and are expected to decline over the course of the week.
ERCOT/TX News
ERCOT Releases System Planning Reports – In late December, ERCOT’s Reliability and Operations Subcommittee released its 2024 Report on Existing and Potential Electric System Constraints and Needs. ERCOT highlighted the Top Ten constraints on the ERCOT system from October 2023 to November 2024 based on real-time data and there was $716 million in congestion rent over this period. ERCOT is projecting congestion will cost $670 million in 2026 and $553 million in 2029. Most of the constraints are in the Far West zone of ERCOT where existing infrastructure is now trying to keep up with growth in renewable capacity, oil & gas infrastructure and expansion of crypto and other data centers.
Source: ERCOT
CAISO, Desert Southwest and Pacific Northwest Energy Summary
Colder temperatures will linger for one more day today across the Rockies before a brief warm up is expected ahead of an arctic front. The pattern will begin to turn much colder for a brief period across Western Canada this weekend while the coldest air of the season is forecast to arrive across the Rockies. The northern reaches and interior West seem to be where the cold is concentrated over the next couple of weeks. There is a near normal lean to the temperature expectations across California and the DSW population centers. Persistent ridging to the west blocks any opportunities for beneficial rain for at least the next couple weeks.
After a brief reprieve, another round of strong Santa Ana winds commences today in SoCal, peaking later today and into early Wednesday. Santa Ana winds kick off when high atmospheric pressure builds over the Great Basin — the area between the Rocky Mountains and Sierra Nevada mountains — and the pressure is low over California’s coast. That sends powerful winds rolling out of the arid Southwest, over the mountains toward the Pacific Ocean. The air get warmer and drier as it rushes toward the coast, exacerbating the region’s drought and drying out vegetation. Some of the strongest wind gusts are expected to range from 50 - 70 mph, not quite as strong as last week’s extreme event in which wind gusts of 80 - 100 mph were recorded including a gust of 84 mph at the Burbank airport. The winds along with very low humidity and widespread drought conditions will keep tensions high across the LA Basin and the existing wildfires still under attack. Notably, the National Weather Service issued another “Particularly Dangerous Situation” Red Flag Warning yesterday — its most severe alert — for Malibu, the San Fernando Valley, and large portions of Ventura County until noon tomorrow. As a team well represented in California and the LA Basin specifically, our hearts go out to all those who have been impacted by the wildfires directly and those you may know who have been affected.
From a grid perspective, demand is tilted lower in SoCal as thousands of homes and business have been displaced. Major transmission lines are still up and running, but on the gas front, SoCalGas is watching things closely as their critical Aliso Canyon storage facility was very near the Hurst fire last week. The return of winds to the area will raise the anxiety level of power and gas operators until at least Thursday. The connection to the rest of the country has lifted SoCal city gate prices above $4 per MMBtu, and PG&E well in the mid-$3.00 range in recent days. This will magnify as colder temperatures not only continue east of the Rockies but to the north as well. Storage levels remain well stocked to meet demand if transport volumes to the west suffer due to production disruptions (wellhead freeze-offs) in the Rockies and Permian, but prices will rise to incentivize the molecules to come out of storage. From a power price standpoint, the markets are operating as usual with day ahead NP15 prices for the peak hours consistently settling $10 - $15 over SP15 as the southern part of the state is swimming in mid-day solar production.
