The US Energy Information Administration (EIA) and many in the energy industry were predicting a significant decrease in natural gas production through the rest of this year and into the first quarter of 2021. Some of this forecasted production decline was due to very low spot and short-term market prices for natural gas. Another significant driver of this expectation was the anticipated decline in gas coming from large crude oil reserves, such as the Permian Basin. However, the recent recovery of crude oil prices has changed this outlook.

A fixed price electricity contract is the most common product selected by commercial clients throughout the deregulated markets in the US. And while the cost of the energy (the electrons moving through the wires) is the often the largest and most volatile part of a retail electricity price, there are several other electricity cost components that are built into that retail price.

PJM released its initial report on electric load reduction as a result of COVID-19. Figure 1 shows the decrease in peak demand (blue bar) and overall electricity usage (green bar) through the middle of May, with weekends shaded in gray. On average, the weekday peak demand (in kW or MW) fell between 6.5% to 15.2%. Overall energy usage (in kWh or MWh) was not as significantly affected and was down by approximately 8% since March 24th. Not surprisingly, the weekends experienced the smallest reduction to demand and consumption.

In 2018, the State of New Jersey passed The Clean Energy Act which requires that 100% of the electricity in the state come from renewable power sources by 2050. For over 15 years, New Jersey has had a vibrant solar power market with structures and incentives that expanded the amount of solar output from 4.3 MWs in 2004 to 2,908 MWs in 2019. 

Summer has arrived in Texas and electricity customers with a meter whose demand is greater than 700 kW should be paying attention to ERCOT’s peak day/hour forecasts. Taking steps now to reduce power usage during hours of the day when the electricity grid is at its peak will reduce delivery charges in 2021.

Last month, we reported that while short-term crude prices were near 20-year lows, natural gas futures prices for the year 2021 were reaching 24-month highs. The rally in natural gas prices in 2021 was primarily driven by the fear that a slowdown in crude oil production from reserves, such as the Permian Basin, would produce less natural gas, which is a by-product of the crude oil extraction process. 

May 2020 it is likely to be the 5^th month in a row where Real-Time LMP (spot) prices in New York City (NYISO Zone J) have settled at their lowest levels in ten years. Figure 1 shows the monthly settlement price in Zone J from 2011 to 2020. Note that the first five months of 2020, shown in the dark green line, are less than all other monthly settlement prices. 

According to a recent report, the Electric Reliability Council of Texas (ERCOT) expects that there will be enough generating capacity to meet periods of peak electricity demand this summer in Texas. Two weeks ago, ERCOT released its final Seasonal Assessment of Resource Adequacy (SARA) report for the upcoming summer (June to September) season. This report forecasts the peak electricity demand on the grid and compares that with the amount of electricity that can be produced by generating assets across the state. The difference between the forecasted amounts of supply and demand is called the reserve margin. 

The State of New Jersey has been at the forefront of an ongoing conflict between a state’s right to establish its own clean energy goals and its participation in a regional competitive electricity marketplace. New Jersey belongs to the PJM Interconnection (PJM), which spans all, or parts of 13 states and the District of Columbia as shown below in Figure 1. New Jersey and many other states want to adopt their own clean energy standards. However, grid operators, such as PJM, are finding it nearly impossible to create a competitive marketplace with consistent rules among states that have very different renewable power goals and carbon emission standards.

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