April 2, 2024

US LNG and Coal

CPV Retail LinkedIn

PJM Regulatory Review

PJM Regulatory Review

  • PJM was pleased to announce last week that average emission rates for the big three, carbon dioxide, nitrogen oxide, and sulfur dioxide declined to a record low in 2023. PJM’s tracking of marginal emission rates and the ability to provide carbon-free energy certificates is in response to growing demand by stakeholders.
  • The DPL South Zone will see a significant upward revision in capacity values when PJM re-runs the 2024/2025 BRA pursuant to a recent ruling by the US Court of Appeals for the Third Circuit. The court ruled that a violation of the filed rate doctrine (retroactive rate-making) occurred and the revised needs a quick remedy since it takes effect on June 1, 2024.
  • PJM and MISO are being urged by various interested parties to begin joint planning coordination for the development of cross-region transmission planning.
  • Recent FERC Commissioner nominees are expressing the importance of reliability in deference to climate impacts for new gas projects.

Market Drivers

Energy Market Update

  • US natural gas production reported for today has fallen below 100 BCF/D as producers try to choke back production during this low-price environment. Colder weather has provided a bit of a respite as there is enough around to defer injections and help minimize storage congestion risks later in the Fall.
  • Oil prices continue to rally as global demand remains strong and product inventories are historically low heading into the US driving season.
  • Global LNG demand remains robust as deliveries to Asia have increased 12% year-over-year primarily due to fuel switching economics. With sub $10/MMBTU delivered prices spot cargoes are having a much easier time finding a home.
  • Haynesville active drilling continues to decline as break-even NYMEX prices for most operators in the basin are above $2.5/MMBTU. Natural field declines coupled with maintenance and field shut-ins will help keep the market better balanced while reducing (not yet eliminating) the possibility of storage congestion later in the Fall.
  • The upcoming solar eclipse (April 8) will create some interesting power supply and hourly pricing volatility as it traverses across the US that afternoon.
  • The recent White House driven pause in LNG permitting has been challenged by a group of 16 states who believe this delay will cause potential buyers to entertain contracting with non-US supplies.
  • Smaller wind and solar generators may become subject to NERC reliability standards if approval from FERC is received as is sought in the recent March 19 filing.

Forward Pricing

Renewable Energy