NYMEX prompt month has decreased by 7.80 cents. The 12 month contract has increased by 10.63 cents at $5.001/dth
The 6 to 10 day forecast expects the Northeast and Midwest to be significantly below normal, Texas to be below normal and California to be above normal. The 10 to 14 day forecast follows the same trend.
There’s a lot of absurdities when trying to wade through the inconsistent and illogical arguments in favor of a Texas centralized capacity market, but the latest line being pitched by capacity market supporters may be our favorite.
Recognizing the infirmity of basically asking Texans to pay $3-4 billion as an additional line item on bills for capacity, Texas capacity market supporters not only claim that the capacity market won’t raise prices by all that much, but, with the Brattle economically-optimal reserve margin report, now claim authoritative proof that costs under an energy-plus-capacity market will be “roughly” the same as the energy-only market.
“The false narrative concerning the cost of a capacity market was shattered in one report,” according to a statement from Eric Bearse, spokesman for capacity market advocate Texans for Reliable Power, which appears on the group’s website. “For roughly the same cost in normal years, and for less cost in extreme weather years, we can ensure the reliability of the grid through the competitive market mechanisms of a capacity market. It will cost a tenth of a cent per kilowatt hour to ensure our electric grid has world class reliability beyond the next few years.”
Elsewhere, capacity market supporters claim, based on the Brattle study, that a capacity market would only cost $400 million, on a net basis, when taking into account future energy market price reductions stemming from having a set amount of installed capacity on the grid
Putting aside any quibbles with Brattle’s methodology and inputs used to reach its cost conclusion, and accepting the calculations as stated, you still have to ask one fundamental question.
If capacity market supporters are so sure that the costs of a capacity market will be roughly the same as an energy market, then why is a capacity market even needed? Under their own logic, the aggregate revenues to capacity owners must be the same — if the capacity market is not going to appreciably increase costs to Texas customers, it logically follows that it will not increase compensation to capacity owners. If that’s the case, why is this market even needed?
We’d expect that the capacity market supporters would say that the capacity market gives certainty to those revenues, and we don’t disagree. But implicit in that certainty argument is that energy market revenues are uncertain. Meaning future energy market prices cannot be known with any reasonable confidence in the future; meaning any evaluation premised on a comparison of future energy prices versus future energy-plus-capacity prices amounts to fantasy.
Indeed, the uncertainty of energy prices has been the refrain for years now from capacity market supporters. Even if, with high price caps, there should be no missing money, per se, in the energy market when scarcity conditions are appropriately reflected in prices, the generators claim that this sound market design is irrelevant, because they cannot invest based on uncertain and unpredictable energy prices, and generators proclaim that there is no guarantee that prices will reach scarcity levels.
Now, however, we are suddenly invited to believe that energy prices are not only predictable, but that, on a total cost basis, the energy-only costs will be about the same as the energy-plus-capacity costs. This argument is premised on routine scarcity pricing at the new higher prices caps — a scenario capacity market supporters have repeatedly said isn’t reliable, but now take as gospel.
If generators are so sure of the higher costs of the energy-only market, what’s the hold up to investment? If they are so confident that compensation under the energy-only market will cost the same to customers as under a capacity market, why aren’t they investing?
The answer is clear. Capacity owners know that maintaining an energy-only market will be a vastly less costly solution than mandating a $4 billion capacity line-item tax on Texas ratepayers, and then hoping three years in the future, there’s enough available capacity on the grid to prevent scarcity pricing and avoid both high energy prices and capacity prices.
One need only look to the recent experience in PJM to show that having an installed capacity base in excess of the reserve margin doesn’t provide any meaningful insurance against energy market volatility or scarcity pricing — witness 40% of PJM capacity being offline during the recent January extreme cold weather, and the attendant price spikes which forced retail suppliers to default, and which led to retail rates approaching (if not exceeding) 30 cents per kilowatt-hour.
It’s clear that capacity prices are divorced from real-time energy prices, which is not surprising, since capacity resources are in no way procured in a manner to optimize least-cost dispatch. Indeed, by virtue of the narrow focus on going-forward fixed costs, the capacity market often results in just the opposite — an old, inefficient collection of resources that are able to clear a government-defined hurdle to have access to the energy market (and then aren’t penalized when suffering the inevitable forced outages from running a 50+ year old unit).
Fantasies that carrying a government-determined level of installed capacity is suddenly going to calm energy market pricing and avoid scarcity conditions should therefore be put to rest. As seen in PJM, energy market prices are just as likely to reach scarcity levels in an environment with mandatory capacity purchases at an installed reserve margin; therefore, unless generators are willing to put their money where their mouth is regarding the cost of a capacity market, and accept dollar-for-dollar clawbacks for costs exceeding their forecast calm energy market revenues, arguments that a capacity market will result in lower energy market prices for Texans should be ignored as wishful thinking.
Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
PHILADELPHIA (CBS) – The Public Utility Commission is again reminding consumers with alternative electric suppliers to check their contracts because increases in the wholesale market price for energy are causing some rates to double and triple.
At the end of January, the PUC issued a warning about increases on the wholesale market.
Spokeswoman Jennifer Kocher says since then, “in just one week, we received 175 complaints from customers expressing concern over their electric bills, and saw their kilowatt-hour price increase, in some cases two and three times.” Full Article http://cbsloc.al/1e7sgnZ
Natural-gas futures soared more than 7% to a four-year high Wednesday on forecasts for another cold blast in the next two weeks.
Traders anticipate more U.S. heating-related demand just as natural-gas supplies have already been depleted by the severe winter.
Gas for March delivery rallied 37.1 cents, or 6.7%, to $5.9220 a million British thermal units Wednesday on the New York Mercantile Exchange. Prices are at their highest level since Jan. 25, 2010.
Just a week ago, weather forecasters were predicting a warming trend through the end of the month. But predictions began changing over the weekend, with a new cold front appearing next week and another “Polar Vortex”-style blast expected over much of the U.S. in early March.
The new forecasts call for “fierce and frigid” cold across the Midwest, the East Coast and even the Deep South, with two days of subzero temperatures in Chicago during the period, according to Commodity Weather Group. And the cold will last longer into the extended forecast than previously expected. Full Article http://on.wsj.com/1d01pKU
Duke Energy confirmed to EnergyChoiceMatters.com that the recently announced sale process for its Midwest commercial generation business includes competitive retail electric supplier, Duke Energy Retail.
Specifically, Duke Energy provided the following statement to EnergyChoiceMatters.com: “Currently, Duke Energy Retail is included in the sales process along with our Midwest generation assets. At the same time, we’ll have more clarity once a buyer has been identified and the scope and terms of the transaction are in place.”
Although the inclusion of Duke Energy Retail was expected, given that its primary purpose was to market or hedge generation from the Midwest assets, in announcing the Midwest generation exit, Duke had not explicitly said that the competitive retail supplier was included in the sale or that it otherwise was going to pursue an exit from the competitive retail electric business.
Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
The price of oil barely budged Thursday. But natural gas futures soared and U.S. drivers again saw higher numbers at the gas pump.
Benchmark U.S. crude for March delivery slipped 2 cents to $100.37 a barrel on the New York Mercantile Exchange. U.S. economic indicators were mostly downbeat on Thursday, suggesting weak demand. A report from the International Energy Agency gave oil some support. The agency raised slightly its 2014 forecast for global demand to 92.6 million barrels a day, 125,000 barrels a day above its previous expectations from a month ago.
Natural gas futures jumped 40 cents, or 8 percent, to $5.22 per 1,000 cubic feet. The Energy Department said supplies fell by 237 billion cubic feet last week, more than the 230 billion cubic feet decline predicted by analysts.
Meanwhile, U.S. drivers are paying 6 cents more per gallon on average than a week ago. The nationwide average climbed 1 penny Thursday to $3.33 a gallon. In Houston Thursday, the average was $3.125 a gallon, up from $3.102 Wednesday, according to AAA.
Brent crude, which is used to set prices for international varieties of crude, fell 6 cents to $108.73 on the ICE Futures exchange in London.
In other energy futures trading in New York: — Wholesale gasoline rose 1 cent to $2.78 per gallon. — Heating oil added 2 cents to $3.03 a gallon.
Posted by Associated Press in Crude oil, Gasoline, Markets, Natural gas
The Obama administration says that SunShot, the R&D program to bring down the cost of solar-generated electricity to where it’s competitive with conventionally sourced electricity, is 60 percent of the way toward its goal, at least when it comes to big solar.
Citing levelized cost of energy data from the National Renewable Energy Lab, the Department of Energy said on Wednesday that “the average price for a utility-scale PV project has dropped from about $0.21 per kilowatt-hour in 2010 to $0.11 per kilowatt-hour at the end of 2013.”
Image via U.S. DOE, based on National Renewable Energy Lab data.
The DOE noted that the average retail price of electricity in the U.S. is 12 cents per kWh. That said, utility-scale solar electricity doesn’t really compete with retail electricity (whereas distributed, or rooftop solar, does) – which is why SunShot has a 2020 goal of getting solar down to 6 cents per kWh, in the neighborhood of the cost of new natural gas-fired generation.
The administration didn’t point to specific SunShot investments that have impacted the cost of utility-scale solar, but the program has supported a wide range of research and development efforts, typically with six- or seven-figure awards, occasionally larger. Many of the funding opportunities have been applicable to distributed solar, but an example of a SunShot program aimed at utilty-scale would be the $25 million grant to Soitec to open a plant in San Diego. The company makes concentrating photovoltaics panels that are used in utility-scale plants in sunny areas like the U.S. Southwest.
In any case, however much SunShot has had to do with the drop in the cost of big solar, surely a much bigger factor has been the precipitous and fortuitous (well, maybe not for Solyndra) decline in the price of solar PV, so steep that power plants that had been envisioned using solar thermal have switched to PV. The factors there have been a host of market forces – demand slipping from high growth rates, polysilicon plunging in price, the over-extended Chinese manufacturing sector dumping cheap panels all over the world, etc. The administration’s loan guarantee program has probably helped utility-scale solar, as well, by getting several big plants launched and showing their viability, and the administration can also take credit for aggressively permitting large amounts of big solar on public lands.
As for how much money has gone into SunShot, with Washington, D.C., emptying out on Wednesday in advance of a forecast snowstorm, we were unable to track down a firm number. However, the Energy Department had said it was looking to spend $356.5 million on SunShot in the 2014 fiscal year.
Source:
http://www.earthtechling.com/2014/02/doe-sunshot-hitting-mark-with-solar-price-plunge/
Updated 11:45 a.m.As snow and ice began melting around mid-day Thursday, the number of households without power began to ease slightly.
An estimated 339,052 were without power statewide just before noon. That number peaked at more than 346,000 Thursday morning.
Still, power restoration crews have a long way to go to get power back on for hard-hit areas, such as Aiken County, where the majority of households were without power for more than a day.
“The storm’s barely gone through,” said Lou Green, spokesman for the S.C. Electric Cooperatives. He said crews in some cases were having to cut their way through downed trees to get to damaged power lines. And line crews were reporting accidents of their own, such as an ice-laden tree limb crashing through the windshield of a bucket truck.
“It’s a challenge,” Green said.
In all, the electric cooperatives were reporting 137,517 without power Thursday; S.C. Electric & Gas showed 113,213 without power; and Duke Energy Progress reported 88,322 outages in South Carolina just before lunch
Updated 11:15 a.m.Problems appear most severe in the Chapin, Gilbert, Pelion and Swansea areas, officials said.
Updated 11 a.m. SCE&G crews will be working through the weekend to restore power outages caused by this week’s ice storm.
The power company’s crews, bolstered by crews brought in from several Midwestern states, worked throughout the day and night on Wednesday to restore power to between 35,000 and 40,000 customers, said Keller Kissam, present of retail operations for SCE&G.
But more lines were being felled by ice as they worked, and the total outages only dropped from about 130,000 Wednesday to about 120,000 at midday Thursday.
The hardest hit areas are from Aiken County through Berkeley County in mostly rural areas. Because of that, Kissam said, crews staged in the higher population areas around Columbia and Charleston will be sent to rural areas.
Richland and Lexington counties had about 8,000 customers without power as of 11 a.m., but Aiken county had nearly 46,000. And that’s only the SCE&G customers, nearly 130,000 customers of mostly rural co-ops were without power Thursday morning.
“Our crews were working very hard through the night,” Kissam said, adding that he empathizes with those without power. His own family didn’t have power at their rural home Thursday morning.
The question all customers without power wants to know is when their power will be restored. “A realistic time frame would be to have it restored by the end of the weekend or early next week,” Kissam said. “Some will be restored today.”
The exceptions might be extremely rural sites or homes where the damage was to equipment on the outside of the building, not to power lines owned by the power company. In those cases, people will have to call a private electrician to make the repairs.
Updated 10:30 a.m. Nearly 345,000 in South Carolina were still without power at mid-morning Thursday, according to utilities serving the state.
The number peaked at more than 346,000 Thursday morning, but crews are working throughout the state to restore power.
Still, the number could rise again as snow continues to fall throughout the frigid state.
At least 12,000 homes and businesses in Lexington County are without power. Nearly 6,600 of those are SCE&G customers, with the rest served by electric cooperatives, officials said. Outages appear most severe in the largely rural southern and western edges of the county, officials said.
Restoration of power may take several hours because crews are encountering tree limbs that fell due to ice, some utility officials said.
“It’s slow going on the back roads,” said Eddie Richardson, spokesman for Mid-Caroline Electric Cooperative.
The outages snowballed in the pre-dawn hours, county administrator Joe Mergo said.
A senior center in Swansea is open as a warming shelter. More may be added on an “as-needed basis,” Mergo said.
SCE&G also reported about 1,900 outages in the Lower Richland area.
Updated 9 a.m.More than 346,000 in South Carolina were without power as of 9 a.m. Thursday as the snow and ice storm hit the state with a one-two punch.
Richland and Lexington counties had relatively few outages, with less than 9,500 reporting no power.
However, nearly everybody in Aiken County is affected. Cayce-based S.C. Electric & Gas serves 52,000 customers in the area, and nearly 47,000 of them don’t have power in the hard hit burg.
The Pee Dee and the coast also were walloped by outages. Duke Energy Progress was showing nearly 33,000 of its 51,000 customers without power.
In all, the state’s electric cooperatives reported 137,517 without power Thursday morning; Duke showed 91,487 customers in South Carolina affected; and SCE&G showed 117,383.
Crews from all of the utilities and other states have been working throughout the night to restore power.
Updated 9 a.m.From the office of the Governor:
This was a brutal night for so many. We currently have over 329,000 outages across the state. We opened 38 additional shelters overnight.
Highway Patrol has responded to 3037 calls for help, 918 were collisions. Roads are frozen making it very hard for utility crews to move around. We are very focused on power restoration and safety.
Please call your emergency county offices should you need anything. Team South Carolina working to get us back on our feet!
Updated 8:15 a.m.More than 300,000 South Carolina customers are without power this morning.
SCE&G, which provides power from the Midlands to Augusta and south, has 116,000 without power. The co-ops that serve much of the Lowcountry around Charleston have 137,000 without power. Duke Energy has about 4,400 power outages in the Upstate. And Duke Energy-Progress has 75,000 customers without power in the Pee Dee.
The hardest hit areas are Aiken, Berkeley, Dorchester and Florence counties.
Updated 7:30 a.m.More than 200,000 customers across the state are without power this morning.
SCE&G reports outages to more than 110,000 customers. More than 7,600 of those are in Lexington County and another 2,800 in Richland County.
The hardest-hit counties are Aiken, which has more than 45,000 customers without power, and Dorchester, which has more than 15,000 in the dark.
More than 80,000 customers of Progress Duke Energy, which serves the Pee Dee, are without power. Nearly 16,000 of those outages are in Sumter County.
Original storyNearly 230,000 South Carolina customers are without power as an ice and snow storm continues to impact the region.
The number of power outages affecting the state’s electric cooperatives has risen dramatically since noon to nearly 104,000 customers.
SCE&G, which was nearing the 100,000 mark around noon has been whittling down the number of outages on its system. It had fewer than 97,000 outages around 2:30 p.m.
Nearly 30,000 Duke Energy customers in South Carolina were reporting outages as of 2:30 p.m.
Most of the problems were reported in the Lowcountry. For the most part, the Midlands fared well, with Richland and Lexington counties reporting few outages. Aiken County was hit the hardest, with more than 15,000 customers there without power as of 2:30 p.m.
The number of outages is expected to rise later in the day as ice builds up on tree branches and power lines.
Power providers have called in extra manpower from other states to help restore power as quickly as possible.
Electric utilities have brought in extra manpower from other states to help restore power as quickly as possible.
As conditions worsen, more outages are possible. A half-inch of ice could add 250 to 500 pounds of extra weight to power lines.
Power loss is expected to continue as the storm settles in over the state and ice builds up on power lines. Cayce-based SCE&G and the state’s electric cooperatives have called in extra manpower to restore power as quickly as possible.
The National Weather Service expects the frozen precipitation to continue for about 24 hours. The mixture of sleet and snow is the best scenario. As the day progresses, it’ll turn to freezing rain that forms as ice on whatever it hits. That’s especially troublesome on trees and power lines.
The amount of ice, sleet and snow from the winter storm likely will be in the upper range what originally was forecast, or even slightly higher.
The most recent update from the National Weather Service indicates an inch or more of ice in a wedge from Aiken and Allendale counties through central Berkeley County to the south and Clarendon County to the north.
The central Midlands around Columbia will get closer to three-quarters of an inch. While areas north of I-20 will get one-third to one-half an inch.
That ice is the most dangerous component of the storm because it weighs down trees and power lines.
In the central Midlands, most of ice is expected to build throughout Wednesday afternoon. It will come on top of a thick coat of sleet and snow – 1-2 inches in the central Midlands, and 2-4 inches just north of I-20. By the time the storm is finished, some areas in northern Newberry and Fairfield counties could have up to eight inches.
A chance of freezing rain is in the forecast through daybreak on Thursday, though it’s expected to taper off to a drizzle or freezing fog after midnight.
Gov. Nikki Haley declared a state of disaster at noon Tuesday, giving emergency officials the full use of government resources. Schools, government offices and many businesses closed early Tuesday and planned not to open Wednesday.
The timing of the arrival of the freezing rain is tricky, depending on temperatures at various levels in the atmosphere as the second slug of moisture replaces the first. Sleet and freezing rain are equally troublesome on roads, but sleet is less of a concern for power companies because it sticks less to tree limbs and power lines.
The forecast calls for frozen precipitation through early Thursday for much of the Midlands, which means schools could open late or have another snow day Thursday.
The last time an ice storm of this magnitude hit the Midlands was in late January 2004, when young pine trees were bent to the ground under heavy ice from Edgefield to Florence. About $20 million in private insurance claims were filed, government agencies incurred $28 million in expenses and SCE&G spent nearly $15 million to repair damage.
Roads are likely to be dicey most of the day Wednesday and early Thursday, but the more serious concern in ice storms is power outages. Hundreds of thousands of people lost power during the 2004 storm.
Most of the Upstate got some snow Tuesday and much more is expected from the second wave. Oconee and Paris Mountain state parks got more than 3 inches Tuesday and were closed. Some areas in the mountains could get nearly 10 inches total, which the lower elevations in the Upstate getting up to 6 inches.
The Lowcountry is forecast to get less of the ice, though still more than a quarter-inch in some areas.
— Kristy Rupon, Roddie Burris and Andrew Shain also contributed to this report
The National Weather Service has issued an advisory of a strong Arctic cold front entering Texas starting this afternoon. Please take steps to conserve electricity during this cold spell. Conserving electricity can help keep your bill low, and can help maintain electricity reliability for all of Texas.
If your business is on an Index rate plan that fluctuates with the wholesale price electricity or natural gas, conservation is especially important, as market prices have been hitting record highs.
You can also help the overall reliability of the grid by encouraging your employees to conserve. Learn more online at our blog.
We appreciate your support for energy conservation
Gas prices are set to fall from the current $4 back to low $3’s. Recent gas rally was caused by a deliverability crisis, and gas should fade back to the coal displacement orbit when withdrawal season ends. In addition, “cap” of coal orbit may have fallen to $3.30 from $4+ as lower-cost Illinois Basin coal displaces Appalachian coal.
$4 Gas Sparked By Short-Term “Deliverability Crisis”. Late winters could have great influence on prices. Main reason is that the ability to withdraw gas from storage declines as storage levels deplete. By March, only 1.5% of gas in storage is accessible on a given day, or 200 bcf per week, by our estimate. Temps this March were this winter’s highlight – 8% colder-than-norm, coldest March since 1996 – in an otherwise mild winter. Read the rest of this entry »
