WEEKLY ENERGY MARKET UPDATE November 06, 2017

Natural Gas Markets 

The December 2017 Nymex natural gas contract is up 8c to $3.065 this morning on the back of colder weather changes in the near term forecast. However the 11-15 day forecast shows a return to warmer temperatures on the East Coast, so the market could be choppy over the next week. US dry gas production is at record levels approaching 76 bcf per day and keeping the market well supplied as we head into winter. Last week’s EIA storage report was a 65 bcf build as expected, and bringing inventory levels close to 3.8 tcf for the start of winter. Last week’s warm weather kept cash prices weak with gated Eastern locations trading under $2 and Marcellus supply around $1 this past weekend. The market continues to hold its breath as we approach the winter to see if any early cold weather appears.
Electricity Market 
Current Month Markets

While most markets are continuing their trends from October, it is worth noting the sharp decline in the NEMA pricing compared to our last update. The first week of November is trending at 50% of the price of October’s settle in NEMA. This can be largely attributed to the return of a few large nuclear units coupled with mild temperatures. It will be interesting to see what type of pressure the return of these nukes will have in the third week of November as cold temperatures are supposed to make their way to the East Coast.

Market MTD DA Settle ($/MWh) MTD RT Settle ($/MWh)
NEMA (ISO-NE) $18.04 $21.46
PSEG (PJM) $25.82                    $25.63
ZJ (NYISO) $23.41 $26.39



Forward Markets
Forward markets gained a considerable amount in the last week and continuing it’s rally this morning. Largely due to the increased short-term cold forecast changed late last week, it will be interesting to see if this dynamic continues toward the end of November. If so, we can expect winter pricing to continue making impressive gains for the remainder of winter.  Given recent volatility, any warmer signals can equally send prices downward as quickly. As with most periods leading up to winter, timing is essential in the next few weeks to lock in a good winter opportunity.

Regulatory News
Connecticut Light & Power has filed Standard Service rates for the period January 2018 to June 2018, and Last Resort Service Rates for the period January 2018 to March 2018.

The January 1, 2018 to June 30, 2018 CL&P (Eversource) residential (Rate 1) supply rate will be 9.078¢/kWh. This is about 13% higher than the current CL&P Rate 1 supply rate of approximately 8.01¢/kWh.

These rates, and all rates below include the bypassable Federally Mandated Congestion Charge of 0.010¢/kWh.

Small C&I Standard Service rates will increase about 12%
CL&P Standard Service Rates, Jan 2018 – Jun 2018 (¢/kWh)

Rate 1            9.078
Rate 5            9.078
Rate 7
On-Peak      11.701
Off-Peak      8.201

Rate 18           9.304
Rate 27
On-Peak      11.353
Off-Peak      8.353

Rate 29           9.304
Rate 30           9.304
Rate 35           9.304
Rate 37
On-Peak      11.353
Off-Peak      8.353

Rate 40           9.304
Rate 41 (less than 500 kW)
On-Peak      11.474
Off-Peak      8.474
Rate 55 (less than 500 kW)
On-Peak      11.474
Off-Peak      8.474
Rate 56 (less than 500 kW)
On-Peak      11.474
Off-Peak      8.474

Rate 115          9.304
Rate 116          9.728
Rate 117          9.728
Rate 119          9.314
CL&P Last Resort Service Rates, Jan 2018 –
Mar 2018  (¢/kWh)

Rates 39, 41, 55, 56, 57, & 58 (at or over 500 kW):
Jan:            11.010
Feb:            11.207
Mar:             8.259

For Last Resort Service rate classes with peak/
off peak periods, the Last Resort Service rates
are identical for each period.

Industry News 
– Moody’s: U.S Unregulated Power Sector Outlook Remains Negative
Moody’s Investors Service is maintaining its negative outlook on the US unregulated power sector for 2018. The annual outlook report observes that the price of natural gas, a key driver of wholesale power prices, seems to have stabilized at relatively low levels after a small rise compared to 2016. In the PJM Interconnection region (Aa2 stable), power prices trended lower during 2017 from the Marcellus Shale region oversupply. A recent Department of Energy letter to the Federal Energy Regulatory Commission instructing it to issue a rule supporting some base load generation is likely to accelerate energy pricing reform and such type of reform may lead to increased revenues for nuclear and coal-fired generation.

– GOP’s ‘Cruel and Unusual’ Tax Plan Cuts Wind Forecast in Half
House Republicans’ proposed tax-reform plan would slice wind development in half, according to a forecast Friday by Bloomberg New Energy Finance. The plan would cut the federal production tax credit for wind power by about a third, and it would also change the requirements to qualify for the subsidy, which is already scheduled to be phased out. The proposal, however, may face resistance ahead.

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