Energy News

FERC – No Emergency in Power Market

nuclear power plants behind solar panels

Suggests Price Instability Is The Larger Threat

All five members of FERC, the regulatory group responsible for the U.S. power grid, stated there is nothing to suggest an forthcoming emergency in the country’s electricity markets. Their testimony before Tuesday’s Senate hearing could undermine the Trump administration’s efforts to save ailing coal and nuclear plants through subsidies. Many of the plants have closed or signaled closure in the face of plentiful natural gas, growth in wind and solar power, and stagnant power demand.

Source: Reuters, U.S. electricity commission sees no emergency in power market


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Poll Results: Ohio Voters Against Re-regulation to Monopoly Utilities

At this point it is old news, that the largest electric utilities in Ohio have been in discussions regarding “restructuring” competitive markets within the state. Despite their efforts to change the current seven-year construct, Ohio voters may be the biggest political snag in their way.
Based on a poll conducted in January and by Fallon Research and Communications, and first reported by The Cleveland Plain Dealer, Ohio voters are very much in opposition of a return to a regulated market construct that would allow monopoly utilities. The telephone survey was conducted in January polled a panel of 800 Ohio voters about key supporting issues. The results favoring energy choice and objection to monopoly utilities were consistent across party affiliation, gender, age, and location.

Results from Fallon Research’s Poll & The Plain Dealer’s Report:
More than 91 percent would oppose any law change allowing FirstEnergy or Columbus-based AEP to build new power plants and raise monthly rates to pay for them. AEP wants to do exactly that, build wind and solar farms and maybe new gas turbine plants while selling off or closing its old coal units.
Nearly 79 percent would oppose any legislation that did away with a customer’s choice to shop for power suppliers. Dozens of independent suppliers now compete for customers through a state-maintained “Energy Choice” website. A return to old-style regulation could end that kind of competition, say independent power companies, forcing customers to return to their traditional electric utilities for electricity as well as delivery.
Nearly 62 percent said they would oppose paying extra every month to support older power plants that cannot compete well against modern gas turbine plants. FirstEnergy has persuaded state regulators to do just that — though the latest subsidy does not mention its power plants. Federal regulators objected to earlier, more expensive proposals that spelled out exactly how the extra fees — amounting to an extra monthly consumer bill every year — would be spent.
Nearly 60 percent of voters would object to the creation of special subsidies for one fuel source — in this case FirstEnergy’s nuclear power plants, which are expensive to operate and do not always compete well against gas turbine plants. The idea has been adopted in New York and Illinois, but has been challenged as anti-competitive. FirstEnergy is considering asking for such a subsidy but has not made a final decision.
AARP and the Alliance for Energy Choice, a group representing independent power producers funded the statewide poll. The Alliance spokesperson, and former chairman of the PUCO, Todd Snitchler spoke on the results of the poll commenting that, “The results of the poll clearly demonstrate that talk about a need for re-regulation or changes to Ohio’s energy landscape, is pointed in the wrong direction.

Fallon Research and Communications. (2017). Ohio Voters on Energy Choice 2017. The Cleveland Plain Dealer [Distributor]. Retrieved from http://www.cleveland.com/business/index.ssf/2017/02/ohio_voters_want_energy_choice.html.

 

Did Christmas come early for the coal industry?

Robert Murray, CEO of Murray Energy Corporation, the largest underground coal mining company in the US based in St. Clairsville (OH) has been one of the most outspoken people in the “war on coal”. Although pleased with the outcome of the election, his excitement is tempered by an underlying reality of how quickly things have changed in the power generation sector.
Mr. Murray would probably like Santa to deliver everyone a lump of coal in their stockings (as a good thing) this year, but is also keenly aware that natural gas and renewables (wind/solar) are taking a larger and larger piece of the generation pie. In fact, in 2007 coal represented 48.5% of the main fuel source for generation, today (through June 2016) it is sitting just under 30%.
Interesting that he doesn’t see the jobs coming back but is also concerned as more LNG and exports are on the horizon, that in turn will drive up natural gas pricing and coal will still be in demand as the main baseload, low cost fuel source for some time to come.

 

For more details:

http://www.powermag.com/coal-magnate-tells-trump-to-lower-his-expectations/?printmode=1

 

 

Natural Gas Producers’ Bankruptcies and its Impact on Gas Production

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As of May 16th – 77 natural gas and oil producers in North America have filed for bankruptcy since 2015, and 35 of those have done so since the start of 2016…

A recent study conducted by PointLogic Energy explored how much production is represented by these 77 companies, where they are located and the overall impact it is having.

The analysis concluded that 4.4 billion cubic feet per day of gas production and 307,000 barrels per day is represented by the bankruptcy companies.  The production of these companies represents 5.4% and 3.6% of the lower-48 states’ gas and oil production respectively.

 

Some major takeaways from the review:

  • The volume of gas attributed to the companies in bankruptcy is much larger than the corresponding volumes of oil.
    • For Example: In Texas 7.5% of natural gas production is bankrupt while only 2.8% of oil production is represented.
  • There are regional winners and losers: Of the major producing states, Texas, Wyoming, Oklahoma and Louisiana bear the brunt of bankruptcy related volumes. The Northeast and Gulf of Mexico appears largely unscathed.

The overall takeaway when reviewing the companies that have filed for bankruptcy is that they are highly weighted to natural gas, rather than oil products.

So what does it mean going forward? If oil prices recover and producers increase drilling we will likely see an increase in associated gas production, regardless of what natural gas prices are doing. Rising gas production from the associated oil production will inflict even more troubles for the bankrupt market segment with storage constraint worries. The remaining summer looks to be a difficult price environment for natural gas producers, especially in the Texas, Oklahoma, Wyoming and Louisiana regions.

 

Is Tesla becoming the “Big-Box Store” of Energy?

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If you shop at a big-box or wholesale store, you know you can get just about anything you could ever need, and things you think you need, (or want, or think you might need) but really don’t.  Tesla’s latest news is their bid for Solar City, the nation’s largest residential solar company.  Elon Musk, as reported, is the Chairman and largest single shareholder in both entities, and the “deal” ($2.5B) still has to be approved by the SEC.

 

In the big scope of things, here’s how it would break down:

  1. Sun shines (power transformed) by your “Tesla” solar panels installed by “Solar City”
  2. Electricity powering your home also is stored in your “Tesla” Powerwall battery system (Giga-factory in Nevada)
  3. Your Powerwall is charging up your “Tesla” car in the garage (batteries included) manufactured by “Tesla”
  4. When you are bored, take a trip on “Tesla” Space X (rocket ship) to Mars (batteries included)

 

No Utility System needed….click the links below for more details:


http://www.energymanagertoday.com/125437-0125437/

http://bigstory.ap.org/article/5eff8a7c05024bcd85a3d6843432d53e/apparent-conflicts-interest-may-dog-tesla-solarcity-deal

http://www.energymanagertoday.com/drama-aside-tesla-acquisition-of-solarcity-makes-sense-0125228/

 

PJM Capacity Auction: Bad News for generators, Good news for customers

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PJM capacity auction results for the planning year of June 2019 to May 2020 announced 5/24/16, were down significantly, almost 40% across most PJM markets from the prior year.   BAD news for generators as it means less revenue to them, but GOOD for consumers in lower costs.

PJM procured 167,306 MW of power at a clearing price of $100 per MW-day in the majority of the region, down from $164.77 per MW-day last year.  It met a reserve margin of 22.4%, meaning that PJM has excess capacity in the amount of 22.4% of expected peak demand.  It is also the highest reserve margin in PJM auction history, ensuring reliability and availability of power for customers during the term.


PJM Capacity Cost Graph - 6.22.16


The results were somewhat surprising considering PJM’s capacity performance (CP) program. Under this program, which was approved last year, power producers that agreed to deliver electricity whenever PJM determines it is warranted would receive higher capacity payments. PJM’s thought or hope was that the increased revenue would result in generators re-investing into their plant infrastructure, secure fuel contracts, and thus increasing reliability during peak demand periods. However, non-performance under this program results in significant penalties. Penalties that did not exist under the old base capacity program.

The 2019/2020 auction is only the second such event to adhere to PJM Capacity Performance program. In this year’s auction, 80% of the resources had to clear according to “capacity performance” with the remaining 20% clearing under the old capacity product “base capacity”. Next year’s auction for 2020/2021 will move to 100% capacity performance.
The takeaway from this year’s auction and the decrease in price is that there would appear to be adequate generation to meet demand, with more coming on-line.

 

Apple to enter the wholesale electricity market?

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That’s right, last week the technology giant filed for permission with federal regulators to sell electricity to consumers on the grid. Apple Energy as it will be known, is mainly intended to feed its own data centers, however, it wants to be able to take surplus power it produces and sell it back to other industrials at market based rates. Apple currently owns or controls generation facilities that qualify for such a task.

As a leading innovator Apple CEO, Tim Cook said, “We take the same innovative approach to the environment that we do with our products.” The Apple mission is to power every one of its facilities using entirely green energy, solar, wind, hydro, and thermal. In 2015, 93% of its energy came from renewable.

Apple says the investment in renewable energy is paying off and they won’t stop innovating as the amount of renewable energy available to them grows.

Who knows? In the near future you might be charging your apple cell phone with apple power.

 

Days of Our Lives (PPA Update)

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Copyright-Delta-Whiskey-Creative-Commons

Does anyone remember “as sands through the hourglass, so are the Days of our Lives”? This is what it seems to be as the “Battle in the Buckeye State” has become with FirstEnergy and AEP Ohio and the approval of their respective rendering of the PPA’s. What had captured national attention from investors and regulators watching from the wings has now garnered the attention of the Feds. Specifically, the Federal Energy Regulatory Commission (FERC). The approval by our PUCO has now been put on hold by FERC for additional review and scrutiny for various reasons.

What seems to be at the heart of the issue is that both proposals put the consumers into a position that they are not able to mitigate or get out of having to pay (non-bypassable) charges that these PPA’s would have triggered.


To learn a little more: