CPV RETAIL BLOG

September 19, 2024

Thank you to those that participated in CPV Retail’s webinar on Navigating the Impacts of PJM’s Base Residual Auction.

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Thank you to those that participated in CPV Retail’s webinar on Navigating the Impacts of PJM’s Base Residual Auction. We hope that you found the discussion to be informative and insightful. For those that were unable to join but are still interested in learning more, we have included the presentation and webinar recording so that you may access at your convenience.

Contact your CPV Retail representative today to discuss how our energy and sustainability products, in-house technical expertise and robust portfolio of efficient thermal and renewable assets can help mitigate market risks for commercial and industrial clients.

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PJM Regulatory Review

PJM Regulatory Review

  • PJM continues to receive commentary on the recently announced Base-Residual Auction results primarily from a variety of consumer advocacy groups who are questioning why units with RMR (Reliability Must Run) contracts do not participate in the auction. Several groups are requesting the PJM Board make it a requirement for these units to offer their MW’s into the auction thus pushing prices down.
  • Due to the results of the BRA Middle River Power is withdrawing its deactivation notice for 4 CT units in Illinois known as the Elgin Energy Center.
  • PJM has responded to FERC’s inquiry in the proceeding regarding Talen’s amended Interconnect Service Agreement (ISA) which was revised to accommodate a potentially significant co-located load proximate to the Susquehanna Nuclear Plant.
  • PJM has also been asked by FERC about why transmission owners initially provide funding themselves for interconnection-related network upgrades and why this is just and reasonable. PJM subsequently punted on this question as that language was artfully drafted by the transmission owners and according to PJM that question should be addressed to the actual transmission owners.

Market Drivers

Energy Market Update

  • Natural gas production has declined below 100 BCF/D over the past week as hurricane-related shut-ins from offshore production coupled with economic reductions have allowed the storage excess to decline below 200 BCF for the first time this season. When the injection cycle started in April the excess was over 500 BCF.
  • Mountain Valley Pipeline flows continue to impact prices in the Mid-Atlantic as Transco Zone 5 in particular has seen both cash and forward basis prices decline.
  • Data center demand continues to dominate the headlines as developers seek immediate solutions to a long-term challenge. With the need for power escalating, new gas generation is necessary but lead times will prevent meaningful additions before 2030. Balancing short-term solutions with sustainable practices will be crucial as the industry navigates this complex landscape.
  • Permian Basin production is now approaching 20 BCF/D with the start-up of Matterhorn Express Pipeline which unfortunately has not yet done much for the negative price trend at WAHA.
  • Oil prices briefly dipped below $70/BBL as the rate of growth in demand in China is called into question due to the widespread adoption of electric vehicles and diesel trucks now running on LNG.
  • Asian LNG demand remains robust which has kept the premium to Europe’s TTF market by $1.0-$1.50/MMBTU and displaced cargoes from Europe to JKM priced Asia.

Forward Pricing

Renewable Energy