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Energy Market Update The summer season is drawing to a close and we hope this update finds you and your loved ones happy and healthy. As autumn quickly approaches and 2020 comes to an end, please reach out to your Chamber Energy Solutions representative for an update on opportunities that may suit your energy needs before the winter chill sets in! Emilie Snider esnider@palmerenergy.com 419 491-1017 Natural Gas: The 2020 natural gas injection season, when supplies are replenished and drilled into underground storage formations, has hit the ~65% mark as of the third week in August. Current year injections are running 299 BCF (-17%), or 299 billion cubic feet, behind the 2019 injection season. Contrastingly, 2020 injections are 125 BCF (+10%) ahead of the five-year average injection season. As figures presently stand, gas supplies in storage sit 580 BCF above the level from one year ago and 438 BCF above the five-year average. All told, current gas storage levels are sitting at an abundant level in advance of the 2020-2021 winter. Despite ample gas storage, fall gas prices have “woken up” out of the dormant sub-$2.00 prices seen dating back to the beginning of the calendar year. The price for September 2020 gas rose from $1.80 on July 31st to $2.58 on August 27th. Winter gas prices experienced similar upticks as summer heat, heightened gas demand for electric generation, returning export demand, and lower oil & gas drilling rig counts have all contributed to the recent pricing “rally”. Such increases will be tough to sustain without cold winter weather (which certainly hasn’t been the norm in recent years). Electric: As the Country continues to find a new normal and things slowly reopen, the wholesale electric market has experienced more volatility than it did during the spring and early summer. Despite having abundant generation to meet consumer demands, shifts in the natural gas market supply and demand balance have created a ripple effect to the electric market over the past 4-8 weeks. Weather, regulatory rumblings, and the continued COVID response will play the biggest roles in near-term pricing. According to the U.S. Energy Information Administration (EIA), energy consumption across the United States is forecast to be only 2.4% less in 2020 when compared to 2019. While commercial and industrial sector usage is down, residential usage is up thanks to people working from home and increased cooling demand from the summer heat. In an article released in early September, PJM, the Regional Transmission Organization (RTO) responsible for ensuring grid reliability in Ohio and a number of other states, echoed these sentiments. In the PJM region, overall usage was down about 4% in August, compared to approximately 9% in the April/May timeframe. PJM is seeing slow and steady recovery in consumption patterns; however, they anticipate load decreases as the hot weather subsides, which may result in an upward trend in COVID-related impacts. Regulatory Update: There are several regulatory items that we are continuing to monitor including PJM Capacity Market reforms, AEP Ohio’s base rate case filing, and questions surrounding what may or may not happen with Ohio House Bill 6 (HB6). CES will continue to provide updates as more information becomes available and finalized.
Energy Market Update
The summer season is drawing to a close and we hope this update finds you and your loved ones happy and healthy. As autumn quickly approaches and 2020 comes to an end, please reach out to your Chamber Energy Solutions representative for an update on opportunities that may suit your energy needs before the winter chill sets in!
Emilie Snider esnider@palmerenergy.com 419 491-1017
Natural Gas:
The 2020 natural gas injection season, when supplies are replenished and drilled into underground storage formations, has hit the ~65% mark as of the third week in August. Current year injections are running 299 BCF (-17%), or 299 billion cubic feet, behind the 2019 injection season. Contrastingly, 2020 injections are 125 BCF (+10%) ahead of the five-year average injection season. As figures presently stand, gas supplies in storage sit 580 BCF above the level from one year ago and 438 BCF above the five-year average. All told, current gas storage levels are sitting at an abundant level in advance of the 2020-2021 winter.
Despite ample gas storage, fall gas prices have “woken up” out of the dormant sub-$2.00 prices seen dating back to the beginning of the calendar year. The price for September 2020 gas rose from $1.80 on July 31st to $2.58 on August 27th. Winter gas prices experienced similar upticks as summer heat, heightened gas demand for electric generation, returning export demand, and lower oil & gas drilling rig counts have all contributed to the recent pricing “rally”. Such increases will be tough to sustain without cold winter weather (which certainly hasn’t been the norm in recent years).
Electric:
As the Country continues to find a new normal and things slowly reopen, the wholesale electric market has experienced more volatility than it did during the spring and early summer. Despite having abundant generation to meet consumer demands, shifts in the natural gas market supply and demand balance have created a ripple effect to the electric market over the past 4-8 weeks. Weather, regulatory rumblings, and the continued COVID response will play the biggest roles in near-term pricing.
According to the U.S. Energy Information Administration (EIA), energy consumption across the United States is forecast to be only 2.4% less in 2020 when compared to 2019. While commercial and industrial sector usage is down, residential usage is up thanks to people working from home and increased cooling demand from the summer heat.
In an article released in early September, PJM, the Regional Transmission Organization (RTO) responsible for ensuring grid reliability in Ohio and a number of other states, echoed these sentiments. In the PJM region, overall usage was down about 4% in August, compared to approximately 9% in the April/May timeframe. PJM is seeing slow and steady recovery in consumption patterns; however, they anticipate load decreases as the hot weather subsides, which may result in an upward trend in COVID-related impacts.
Regulatory Update: There are several regulatory items that we are continuing to monitor including PJM Capacity Market reforms, AEP Ohio’s base rate case filing, and questions surrounding what may or may not happen with Ohio House Bill 6 (HB6). CES will continue to provide updates as more information becomes available and finalized.