In today’s AUSenergy News Update: Natural gas futures drop despite NE snowfall, AEP’s coal due to fall in 2015, Supreme Court appeal on FERC Order 745 leaves demand response in limbo.
Summary: U.S. natural gas prices fell sharply on Monday, despite forecasts for heavy snowfall in the heavily populated Northeast region over the next two days. Natural gas prices have been extremely volatile in recent sessions as investors react to daily changes in weather patterns, including a price surge of 13.1 cents or 4.63% this past Friday.
AUS Comment: Analysts believe that the market fell on Monday simply because the forecast went from 3 feet of snow to only 18-24 inches. Proving once again – that the bottom line in natural gas pricing is that small changes in weather forecasts can cause dramatic changes up or down in pricing levels. Your best bet is to play it safe and secure a fixed price that prevents you from being negatively affected by price surges when they occur.
Summary: Coal consumption at American Electric Power’s regulated power plants in the US is expected to fall slightly this year to about 39 million st from 40.6 million st in 2014. AEP owns about 38,000 MW of generating capacity, including 23,000 MW of coal-fired plant.
However, the company plans later this year to retire more than 6,000 MW of coal-fired capacity, shrinking coal’s share of its generation mix from 61% in 2014 to 52% in 2016.
AUS Comment: The EPA’s rulings are prompting this and other coal-fired plant closings across the country, and it’s about time! Look for utilities to expand their generation mix to include more natural gas as well as a significant percentage of renewables.
Summary: Though the Obama administration filed an appeal asking the Supreme Court to uphold FERC Order 745 and affirm the agency’s authority to regulate demand response in wholesale markets – it could be 8 months or longer before the court decides whether or not to even hear the case
AUS Comment: As a member of PJM, AUS attends monthly meetings and has a say as to how PJM will change their DR model. Currently PJM is suggesting the discontinuation of the current limited and extended summer DR and proposes only one DR product – the annual DR with extended periods of unlimited interruptions. This will indeed impact current contracts and in affect, prevent current small business participation.
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