The document provides a summary of the Summer 2014 Energy Market and Reliability Assessment. Key points include:
- Reserve margins are projected to remain adequate across all regions of the country despite some generation retirements. Texas is expected to be slightly above its reserve margin target.
- Drought conditions in California could tighten electric and gas markets as hydro generation decreases and gas-fired generation increases. Transmission constraints also remain in parts of Southern California.
- The expansion of markets in SPP and MISO South will operate for the first time under summer conditions, which should improve dispatch efficiency. However, low coal stockpiles in parts of the Midwest may put upward pressure on prices.
- Natural gas and electric futures
New Age Energy Markets - Challenges for Utilities, IPPs and TradersCTRM Center
The North American power and gas markets are undergoing an accelerating evolution driven by increasing regulation, new and emergent technologies, and a persistent surplus of natural gas brought about by the “shale revolution.” The transformation from a coal-centric power market to one reliant upon renewables and natural gas for baseload power generation has had profound operational and commercial implications for both the electricity and natural gas markets.
Much of the change that has emerged has been catalyzed by regulation at the federal, regional and state levels, including emissions/greenhouse gas regulation and renewable portfolio standards. These regulatory mandates have been largely answered by technology – cheaper and more efficient solar and wind generation, abundant sources of natural gas from long-reach lateral drilling and massive hydraulic fracturing, smart grid technologies that improve grid efficiency and reliability, and more efficient industrial and consumer appliances that reduce system load. In aggregate, these changes have had massive and ongoing impacts across the energy industry in the US, increasing complexity of operations and affecting the business models of many of its participants.
Remaking American Power - CSIS & Rhodium Group Preliminary Findings of EPA's ...Marcellus Drilling News
On June 2 the federal Environmental Protection Agency (EPA) announced it's "kill coal" campaign which they dubbed the Clean Power Plan or CPP. Researchers at the Center for Strategic and International Studies (CSIS) and the Rhodium Group, both research organizations, combined forces to take a close look at how they believe the CPP will fundamentally change American power generation. These are their preliminary findings.
A report published by the independent energy consulting firm Concentric Energy Advisors. The report finds that if the PennEast Pipeline is built, PA electric and natural gas customers will see a combined savings of over $500 million, while NJ electric and gas customers will see a combined savings of nearly $400 million.
New Age Energy Markets - Challenges for Utilities, IPPs and TradersCTRM Center
The North American power and gas markets are undergoing an accelerating evolution driven by increasing regulation, new and emergent technologies, and a persistent surplus of natural gas brought about by the “shale revolution.” The transformation from a coal-centric power market to one reliant upon renewables and natural gas for baseload power generation has had profound operational and commercial implications for both the electricity and natural gas markets.
Much of the change that has emerged has been catalyzed by regulation at the federal, regional and state levels, including emissions/greenhouse gas regulation and renewable portfolio standards. These regulatory mandates have been largely answered by technology – cheaper and more efficient solar and wind generation, abundant sources of natural gas from long-reach lateral drilling and massive hydraulic fracturing, smart grid technologies that improve grid efficiency and reliability, and more efficient industrial and consumer appliances that reduce system load. In aggregate, these changes have had massive and ongoing impacts across the energy industry in the US, increasing complexity of operations and affecting the business models of many of its participants.
Remaking American Power - CSIS & Rhodium Group Preliminary Findings of EPA's ...Marcellus Drilling News
On June 2 the federal Environmental Protection Agency (EPA) announced it's "kill coal" campaign which they dubbed the Clean Power Plan or CPP. Researchers at the Center for Strategic and International Studies (CSIS) and the Rhodium Group, both research organizations, combined forces to take a close look at how they believe the CPP will fundamentally change American power generation. These are their preliminary findings.
A report published by the independent energy consulting firm Concentric Energy Advisors. The report finds that if the PennEast Pipeline is built, PA electric and natural gas customers will see a combined savings of over $500 million, while NJ electric and gas customers will see a combined savings of nearly $400 million.
A sort of "year in review" for the gas industry in the northeast. If you could boil it all down, the word that appears prominently throughout is "delay" with respect to important natgas pipeline projects. From the Constitution, which should have already been built by now, to smaller projects, delays were the prominent trend for 2016.
Preliminary Seasonal Assessment of Resource Adequacy for the ERCOT Region, Su...EPIS Inc
ERCOTS's preliminary assessment of resource adequacy for the ERCOT region in Summer of 2015. This was originally posted on March 2, 2015 on www.ercot.com. A portion of this is quoted.
A sort of "year in review" for the gas industry in the northeast. If you could boil it all down, the word that appears prominently throughout is "delay" with respect to important natgas pipeline projects. From the Constitution, which should have already been built by now, to smaller projects, delays were the prominent trend for 2016.
Preliminary Seasonal Assessment of Resource Adequacy for the ERCOT Region, Su...EPIS Inc
ERCOTS's preliminary assessment of resource adequacy for the ERCOT region in Summer of 2015. This was originally posted on March 2, 2015 on www.ercot.com. A portion of this is quoted.
The Executive Summary from the Natural Gas Supply Association’s (NGSA) 2015 Winter Outlook for Natural Gas. The full report concludes that the price of natural gas for the winter ahead will be pretty much the same as last winter's prices.
Report: Access Northeast Project - Reliability Benefits and Energy Cost Savin...Marcellus Drilling News
A report commissioned by Spectra Energy and its partners, researched and published by ICF International, which provides strong justification for the proposed Access Northeast pipeline project in New England. The project would flow Marcellus Shale gas from Pennsylvania to New England (and into Canada), providing New England electric generators that use natgas as fuel with an important, cheap new source. The project would lead to much lower electricity costs for New Englanders.
A brief overview of North American Unconventional Gas and Future Trends. A presentation by Don Warlick on October 8, 2009 at the WCLI conference in Santa Barbara, California.
After a “perfect storm” of global recession and shale gas
expansion, a new wave of environmental, production, transport, and international demand drivers have the energy market on a bull run. This white paper outlines the driver for longer term energy price increase trends, and discusses steps an organization may take to minimize related risks. - Expertise authored by Ecova, Inc
An annual report issued by the Federal Energy Regulatory Commission on the state of energy markets in the U.S. In this year's report, FERC says most places across the country have seen a bump up in pipelines over the past 10 years, relieving constrained natural gas transportation. Except for the Marcellus/Utica region. In the northeast, FERC expects the situation of oversupply and not enough pipelines to get resolved in 2019.
Navigant: North American Natural Gas Market Outlook - Year-End 2014: A View t...Marcellus Drilling News
A report issued by global consulting firm Navigant. The report says U.S. natural gas supply will increase from 72 billion cubic feet per day (Bcf/d) in 2015 to nearly 110 Bcf/d by 2035. Other key insights.
NGSA's Outlook for Natural Gas Supply and Demand for 2016-2017 WinterMarcellus Drilling News
A report compiled by Energy Ventures Analysis, Inc. for the Natural Gas Supply Association predicting that winter 2016-2017 will be colder and snowier than last year, creating more demand for natural gas and ultimately driving the price of natgas higher.
Gas bulls should pray cause da' bears may own the dayBloomberg LP
U.S. natural gas prices will likely average well below $3 per MMBtu this winter and pressure on Appalachian-basis price differentials will persist as well, hurting Marcellus and Utica shale operators.
Electrical problems in Yucatan peninsulaMaría Serna
With the recent events, our midstream & downstream partner, David Rosales wrote this onepager to address the current electrical crisis in the Yucatán peninsula and raises out awareness in Baja California and Baja California Sur.
With a deep history in oil and gas, many Texans – and North Texans – are paying close attention to the trends in gas prices. In the next Topic: North Texas webinar, Keith Poli with Constellation will provide unique insights into the conditions that may affect the supply and pricing of the ERCOT power and gas load. This presentation will look at the current energy landscape and provide insights into the current market conditions including weather as a key driver, production, supply and demand.
Solar holds the key to renewable energy development in the GCC region as it is the single most abundant renewable source of energy available there. Power produced from solar energy is efficient and cheaper as compared to other renewable sources of energy. The research report investigates the solar power potential of the region and individual countries. Huge investments and research studies are happening in efforts to tap the solar energy in the region as part of the renewable energy development. Almost 85 to 90% of the money being spent on renewable energy development is being put in solar energy. The “GCC Renewable Energy Sector Analysis” research report documents all the initiatives being taken in the individual countries to help boost their power production from solar energy. The research report from KuicK research vitalizes solar energy as a means to the targeted power production from renewable energy. The future of solar power in the GCC region, according to the report, is as bright as sunshine.
Uncertainty is Clouding the Energy Trading OutlookCTRM Center
As the United States continues to rapidly grow its production of oil and gas from shale, and Canada increases production from its oil-rich tar sands, these new volumes are helping to support world oil markets as crude production outside the US declines due to increasing conflict in the Middle East and North Africa. Should these conflicts widen, the global markets will be increasingly volatile as supply disruptions outpace the growth in North American production.
Though US natural gas production has not yet impacted the global market space via LNG exports, there is no doubt that those exports will happen. While the impact on US prices is unclear at this time, these exports will be yet another variable with which to content in a US market already unsettled by increasing regulations that will, by design, reshape the US energy mix.
Dealing with this uncertainty will require increasing market vigilance, with a constant view on both the near and longterm energy outlook, and supported by a commodity trading and risk management solution that facilitates analytics, market visibility and regulatory compliance, such as Eka Energy.
Final Seasonal Assessment of Resource Adequacy for the ERCOT Region, Summer 2...EPIS Inc
ERCOTS's preliminary assessment of resource adequacy for the ERCOT region in Summer of 2015. This was originally posted on May 4, 2015 on www.ercot.com. A percentage and a section of text is quoted.
Literature Review Basics and Understanding Reference Management.pptxDr Ramhari Poudyal
Three-day training on academic research focuses on analytical tools at United Technical College, supported by the University Grant Commission, Nepal. 24-26 May 2024
We have compiled the most important slides from each speaker's presentation. This year’s compilation, available for free, captures the key insights and contributions shared during the DfMAy 2024 conference.
Using recycled concrete aggregates (RCA) for pavements is crucial to achieving sustainability. Implementing RCA for new pavement can minimize carbon footprint, conserve natural resources, reduce harmful emissions, and lower life cycle costs. Compared to natural aggregate (NA), RCA pavement has fewer comprehensive studies and sustainability assessments.
6th International Conference on Machine Learning & Applications (CMLA 2024)ClaraZara1
6th International Conference on Machine Learning & Applications (CMLA 2024) will provide an excellent international forum for sharing knowledge and results in theory, methodology and applications of on Machine Learning & Applications.
KuberTENes Birthday Bash Guadalajara - K8sGPT first impressionsVictor Morales
K8sGPT is a tool that analyzes and diagnoses Kubernetes clusters. This presentation was used to share the requirements and dependencies to deploy K8sGPT in a local environment.
Online aptitude test management system project report.pdfKamal Acharya
The purpose of on-line aptitude test system is to take online test in an efficient manner and no time wasting for checking the paper. The main objective of on-line aptitude test system is to efficiently evaluate the candidate thoroughly through a fully automated system that not only saves lot of time but also gives fast results. For students they give papers according to their convenience and time and there is no need of using extra thing like paper, pen etc. This can be used in educational institutions as well as in corporate world. Can be used anywhere any time as it is a web based application (user Location doesn’t matter). No restriction that examiner has to be present when the candidate takes the test.
Every time when lecturers/professors need to conduct examinations they have to sit down think about the questions and then create a whole new set of questions for each and every exam. In some cases the professor may want to give an open book online exam that is the student can take the exam any time anywhere, but the student might have to answer the questions in a limited time period. The professor may want to change the sequence of questions for every student. The problem that a student has is whenever a date for the exam is declared the student has to take it and there is no way he can take it at some other time. This project will create an interface for the examiner to create and store questions in a repository. It will also create an interface for the student to take examinations at his convenience and the questions and/or exams may be timed. Thereby creating an application which can be used by examiners and examinee’s simultaneously.
Examination System is very useful for Teachers/Professors. As in the teaching profession, you are responsible for writing question papers. In the conventional method, you write the question paper on paper, keep question papers separate from answers and all this information you have to keep in a locker to avoid unauthorized access. Using the Examination System you can create a question paper and everything will be written to a single exam file in encrypted format. You can set the General and Administrator password to avoid unauthorized access to your question paper. Every time you start the examination, the program shuffles all the questions and selects them randomly from the database, which reduces the chances of memorizing the questions.
A review on techniques and modelling methodologies used for checking electrom...nooriasukmaningtyas
The proper function of the integrated circuit (IC) in an inhibiting electromagnetic environment has always been a serious concern throughout the decades of revolution in the world of electronics, from disjunct devices to today’s integrated circuit technology, where billions of transistors are combined on a single chip. The automotive industry and smart vehicles in particular, are confronting design issues such as being prone to electromagnetic interference (EMI). Electronic control devices calculate incorrect outputs because of EMI and sensors give misleading values which can prove fatal in case of automotives. In this paper, the authors have non exhaustively tried to review research work concerned with the investigation of EMI in ICs and prediction of this EMI using various modelling methodologies and measurement setups.
Water billing management system project report.pdfKamal Acharya
Our project entitled “Water Billing Management System” aims is to generate Water bill with all the charges and penalty. Manual system that is employed is extremely laborious and quite inadequate. It only makes the process more difficult and hard.
The aim of our project is to develop a system that is meant to partially computerize the work performed in the Water Board like generating monthly Water bill, record of consuming unit of water, store record of the customer and previous unpaid record.
We used HTML/PHP as front end and MYSQL as back end for developing our project. HTML is primarily a visual design environment. We can create a android application by designing the form and that make up the user interface. Adding android application code to the form and the objects such as buttons and text boxes on them and adding any required support code in additional modular.
MySQL is free open source database that facilitates the effective management of the databases by connecting them to the software. It is a stable ,reliable and the powerful solution with the advanced features and advantages which are as follows: Data Security.MySQL is free open source database that facilitates the effective management of the databases by connecting them to the software.
Dr Dev Kambhampati | FERC- Summer 2014 Energy Market & Reliability Assessment
1. Page 1 of
14
Item No: A-3
May 15, 2014
Summer 2014
Energy Market and
Reliability Assessment
Good morning Madam Chairman and Commissioners. We are pleased to present the Summer
2014 Energy Market and Reliability Assessment, a joint effort of the Office of Enforcement
and the Office of Electric Reliability. The Summer Assessment is the staff’s annual
opportunity to share our assessment of the electric, natural gas, and other energy markets as
we head into the summer months.
This presentation does not necessarily reflect the views of the Commission or any
Commissioner.
Electric and natural gas market conditions this summer will reflect exceptional gas burn and
storage withdrawals this winter, and the anticipation of a warmer-than-normal summer for
much of the country. The possibility of a summer El Nino may moderate temperatures and
associated market impacts. CAISO markets face a deep drought, while market expansions in
SPP and MISO enter their first summer period of operation.
2. Page 2 of
14
Key Takeaways
Reserve margins remain adequate and
recover in Texas
Drought could affect California prices and
operations
First summer operations for MISO South
and SPP Integrated Marketplace
Natural gas and electric futures prices climb
The key takeaways from today’s presentation are as follows:
Forecasted reserve margins are adequate across the country. New resources in Texas are
projected to put the region slightly above their reserve margin target this summer.
Drought could affect California’s electric and gas markets as gas-fired generation increases to
offset lower hydro generation.
The MISO South region and SPP Integrated Marketplace will operate under summer conditions
for the first time, which should lead to lower production costs to serve system needs.
Higher electricity forward prices reflect increases in natural gas forwards. While futures are
not a forecast of prices, this signals market expectations for higher prices this summer.
3. Page 3 of
14
Reserve Margins Adequate
in All Regions
Source: NERC
Actual 2013 demand not yet available.
Preliminary data from NERC’s Summer Assessment indicates that reserve margins will exceed
planning targets for all assessment areas this summer. One area we have focused on in
recent years is Texas. This year, ERCOT is forecasting a reserve margin of 15 percent, just
above its reserve margin target of 13.75 percent. MISO is also forecasting a reserve margin of
15 percent, compared to its reserve margin target of 14.8 percent.
Overall, NERC’s total U.S. load forecast, when weather adjusted, is essentially unchanged
over the past few years.
There has been a net reduction in available capacity of 10 GW NERC-wide since last summer.
For example, PJM had a net reduction of about 2.5 GW of capacity. However, NERC is
currently not projecting problems in any region due to these retirements. Forecasts for
retirements in 2015 and forward to 2023 will be available from the Long-Term Reliability
Assessment in the fall.
4. Page 4 of
14
Wind and Solar Capacity
Source: NERC
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014
NameplateCapacity(GW)
Wind
Solar
The NERC Summer Assessment forecasts that the summer installed nameplate wind capacity
will increase by about 4 GW, or about 7 percent from 2013. This will bring the total
nameplate capacity across the nation to approximately 61 GW. The forecasted average on-
peak wind capacity for this summer is 17 percent of nameplate capacity.
NERC also projects that approximately 6 GW of new utility-scale solar capacity will come
online this summer, most of which is located in Southern California and Arizona. This
represents a substantial increase in solar capacity in California over the past two years.
Rapid changes in wind and solar generation, particularly in the morning and evening, are
expected to increase the need for flexible capacity for balancing and regulation.
5. Page 5 of
14
New Resources in Texas
Source: ERCOT and NERC
Sherman
Ferguson
Temple
Deer Park
As noted, ERCOT is projecting a reserve margin of 15 percent, assuming that normal weather
conditions occur in Texas this summer. This projection includes over 2 GW of new gas-fired
resources that are forecast to enter commercial service by August 1. Texas load typically
peaks in August; however, an early season heat wave could stress the system before these
new facilities are available.
6. Page 6 of
14
Fuel Issues to Monitor
Limited railroad capacity could affect coal
deliveries and stockpiles
Higher demand for natural gas to fuel
peaking units and replenish underground
storage
Drought will affect hydro resources in
California
NERC reports that a number of coal-fired generating stations experienced delayed coal
deliveries last winter. In some cases, these delays were because of ice on barge and shipping
routes, while in other cases the delays were because of congestion and equipment problems
on the rail network. Information from the Surface Transportation Board indicates that rail
network congestion in some areas will continue into this summer because of the increased use
of rail transportation for petroleum products and other commodities coming out of the
Dakotas and the Upper Midwest, as well as limitations on rail capacity and equipment in the
area. However, projections by the EIA indicate that reduced demand during the shoulder
months could allow coal stockpiles to be replenished before the summer peak.
After a particularly cold winter, natural gas storage inventories are lower than normal. As a
result, the natural gas pipeline network will likely be called on to both replenish storage
inventories and to provide gas for generators during the summer peak. At this time, NERC is
not projecting any fuel issues which would affect reliability this summer, but it is an issue
that we will continue to monitor.
While the California assessment area in WECC continues to experience a severe drought,
water conditions have improved since March, and new gas and solar resources should help to
keep the anticipated reserve margin at acceptable levels for this summer.
7. Page 7 of
14
Tight Market Conditions
in California
Drought: low hydro,
generator limitations
Gas fired demand
expected to rise
So. Orange County
and San Diego
remains constrained
Source: U.S. Drought Portal
California’s electric and natural gas operations could experience elevated prices this summer
from challenges that include drought, hot weather, and fire hazards. NOAA forecasts warmer
than normal temperatures for much of California as a deep drought continues. Statewide
snowpack was only 33% of normal on April 1, the traditional peak of the snow accumulation
season. As of May 11, reservoir water storage was 66% of the historical average, resulting in
part from low precipitation in previous years. The low snowpack and reservoir levels will
reduce hydroelectric generation, possibly to half normal levels. These challenges may affect
the entire state, however market impacts may be more pronounced in the north and central
areas, given low hydro conditions.
The water conditions in the state may have additional implications for summer power
operations. Low stream flows may restrict the availability and use of water for natural gas-
fired power plants. State officials are assessing such restrictions. CAISO has added over 3 GW
of generation since last summer, which will help offset drought-related supply limitations,
and primarily consists of natural gas and solar. Further, Pacific Northwest snowpack is near
or above normal, which raises the potential for lower cost imports for at least the early part
of the summer.
Transmission limitations continue to restrict the amount of power that can be imported into
the southern part of Orange County and San Diego, resulting in limited imports and use of
higher cost local generation. Overall supply and demand conditions remain similar to last
summer.
Turning to natural gas markets, low hydro conditions, gas storage replenishment, new gas
fired generation, and forecasted warm weather are likely to lead to above normal summer gas
demand. This could lead to pipeline congestion, particularly in Southern California, and high
natural gas prices. This is already evident in summer forward prices. Increased solar
generation may moderate the increase in gas demand.
8. Page 8 of
14
Market Expansion in
Central Region
First summer for SPP
Integrated Marketplace
and MISO South
Potential coal delivery
delays and low stockpiles
Significant transmission
additions
MISO
SPP
Source: Produced in Ventyx Energy Velocity
The new SPP Integrated Marketplace and MISO South region will operate for the first time
under summer conditions. Both market expansions should improve unit commitment and
dispatch, especially in more congested areas, as units should be used more efficiently relative
to their value in alleviating congestion. MISO may see prevailing flows from north to south
because of comparatively less expensive generation in the northern region, however flows
could reverse under peak conditions as MISO South has a greater capacity surplus.
Increased coal generation this winter reduced coal stockpiles in parts of the Midwest and
Plains. Some generators have had difficulty replenishing their inventories due to railroad
congestion. If this persists into the summer, the market could exhibit upward pressure on
electricity prices in some areas by reducing the availability of some lower-cost generators
operating on Powder River Basin coal.
New transmission in SPP and MISO may improve access to wind resources and provide
congestion relief for areas such as the Texas panhandle and west Kansas in SPP.
9. Page 9 of
14
Transmission Expansion
and DR Reliance in East
Source: Derived
from PJM data Base Residual Auction Year
Transmission improvements should also yield market benefits in the east. Two 500 kV
projects in eastern and central PJM, the Mount Storm-Doubs rebuild and the Hopatcong-
Roseland segment of the Susquehanna-Roseland project, are scheduled to enter service in
June 2014 and should help reduce congestion. The Greater Springfield Reliability Project in
ISO-NE will provide incremental congestion benefit to western Massachusetts and northern
Connecticut. Full service of the Neptune line in NYISO will increase import capability and
exert downward price pressure in Long Island, a typically constrained zone. Changes in
congestion management on the Ramapo line will enable more market interchange benefits
between NYISO and PJM.
Demand response (DR) remains an important resource under high load conditions in the
eastern region. DR will provide a larger proportion of reserves in PJM, which presents a
greater opportunity for evaluating the performance of DR activations. Although the amount
of cleared DR capacity decreased in NYISO, recent measures to improve performance may
increase DR responsiveness.
10. Page 10
of 14
NG Summer Futures
Prices Rise
Source: Bloomberg
Note: 2013 reflects average June, July and August 2013 prices set in May 2013. While, 2014 reflect average June, July, August 2014 set in May 2014.
FuturesPrice($/MMBtu)
NYC
BOSTON
CHICAGO
ROCKIES
MID-ATLANTIC
SO.CALIFORNIA
NO.CALIFORNIA
HENRYHUB
This graph shows that average natural gas futures prices for June, July and August are
generally higher than last summer. Henry Hub summer futures averaged $4.81/MMBtu as of
May 6th
, 84 cents higher than last summer. The largest increases are in the West, where
Southern California and Northern California are up 97 cents and $1.23, respectively, making
them two of the most expensive points in the country. The higher prices there reflect
expectations for high summer natural gas demand in California. Futures prices in New York
City are about the same as last summer but they remain 58 cents below the Henry Hub. The
market expects few constraints into New York City this summer because of the NJ-NY
Expansion Project put into service November 2013 and greater access to low cost Marcellus
shale gas.
11. Page 11
of 14
Source: Bloomberg Note: Coal prices are adjusted for relative power plant efficiency.
Gas-FiredGeneration(Bcfd)
Coal/GasPrice($/MMBtu)
Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14
Coal Generation Likely to
Surpass Gas This Summer
This graph shows natural gas burned for generation compared to historical and summer
futures prices for natural gas and coal. When natural gas prices remain near or below coal
prices for an extended period of time during the summer, natural gas fired generation ramps
up as the market shifts away from coal. Gas futures prices this summer are over $1/MMBtu
higher than coal futures, compared to 41 cents higher last summer. In 2012, natural gas was
57 cents cheaper than coal resulting in record natural gas-fired generation. Higher natural
gas prices this summer should make natural gas-fired generation less competitive with coal,
with gas burn projected to be 2.5% lower than last summer and 17% below the summer of
2012.
Higher natural gas prices also create greater incentives for increased production. Currently
natural gas production is projected to grow 3% in 2014. Moderate natural gas burn and higher
production would help natural gas storage recover from the current low levels. However,
summer natural gas fired generation increasingly competes with storage injections for supply,
and utilities may face some natural gas delivery constraints as LDCs and pipelines begin to
refill storage.
12. Page 12
of 14
Summer Electric Futures
Increase after Winter
Source: Derived from ICE and Bloomberg data
Average electric futures for June through August increased markedly from November 2013 to
May 2014. The increases were between 19 and 30 percent for the Mid-C, PJM-West, NYISO
Hudson Valley, and ISO-NE Internal Hubs. The series of extreme cold weather events in the
2013/2014 winter significantly increased electric futures prices, which mirrored increases in
gas forwards. Futures prices increased in the West, which also reflects updated expectations
for drought conditions. Regional variances in futures prices result in part from differing fuel
mixes. For example, Mid-Columbia prices reflect a strong contribution from low-cost hydro,
and Mass Hub prices reflect greater reliance on comparatively higher-cost gas generation.
Spot electricity prices are particularly sensitive to weather conditions in the summer.
Extreme heat elevates electricity prices through load spikes. Extended heat waves create
additional price pressure by inducing generation and transmission derates and outages.
13. Page 13
of 14
Forecasted Summer
Weather
Source: NOAA Climate
Prediction Service
The National Weather Service is forecasting above-normal temperatures along the Pacific
coast, inland through the Southwest, and spreading northward through the Great Basin and
Pacific Northwest. NWS also projects above-normal temperatures from central Texas,
through the entire Southeast, and along the Eastern Seaboard as far north as Maine. These
forecasts do not project severe weather events, which commonly have major impacts on
market outcomes.
Offsetting this hot forecast, some forecasters are calling for a weak to moderate El Nino to
develop by the summer. This tends to inhibit tropical storm development, and generally
results in wet and cool summers in the central and eastern U.S. A strong El Nino may result in
cooler and wetter weather across the country.
Current hurricane forecasts call for 10-12 named storms, with 4-5 of those storms becoming
hurricanes. Forecasters expect only 2 of those hurricanes to be category 3 or greater. The
30-year average is 12 named storms, 6 hurricanes, and 3 intense hurricanes. Hurricanes are
much less important to the U.S. gas market than just a few years ago, as offshore gas
production has declined, from supplying more than 20% of the U.S. gas market to around 5%.
14. Page 14
of 14
Item No: A-3
May 15, 2014
Summer 2014
Energy Market and
Reliability Assessment
This concludes our prepared remarks. We will answer any questions you may have.