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OCTOBER 2013 Incorporating
SOLAR POWER
into your energy strategy
Reduce your electricity cost and
fulfill your sustainability goals
with ConEdison Solutions solar
photovoltaic (PV) program.
You Made Our Autumn Breakfast Event a Great Success!
A big thank you goes out to our guests who attended our Autumn Energy
Thought Leadership Breakfast earlier this month. The attendance was
robust and the conversations about energy market pricing, demand
response, and distributed generation were enlightening.
A special thanks goes out to our guest panelists, who offered their expertise
on distributed generation and demand response with acumen and wit,
answering questions ranging from how to permit a facility's co-generation
units for emergency demand response to how the government's shutdown
impacts the permitting process.
Our Winter Energy Thought Leadership Breakfast will take place in January
and will focus on Resiliency and Energy Storage. Look for the invitation in
your inbox and register early. Our breakfast events are not to be missed!
Market Outlook
The Million Dollar Question: What will natural gas and electricity prices be this
winter?
Regulatory Updates ERCOT's ORDC Policy Change Executive Perspective
Green Initiatives from the New York State PSC Question of the Month
Your chance to win an iPod Shuffle Congratulations to Kent Dombal who correctly answered last month's energy
question and won our drawing.
As always, we appreciate your feedback. Please keep it coming to
[email protected].
Click here for a PDF of the October Current Scoop You may unsubscribe from the Current Scoop newsletter by selecting the
unsubscribe link in the footer of this communication. QUESTION OF THE MONTH
Test your knowledge and enter
for a chance to win an iPod
shuffle. All answers must be
submitted by November 1.
Participants who submit correct
answers will be entered in our
drawing.
Out of the many predictive
maintenance technologies
available to facility managers,
which ONE of the following
three technologies can be
applied across all aspects of a
facility's infrastructure:
A) Ultrasonic Noise Detection
B) Visual Inspection
C) Infrared Thermography. All answers must be submitted
to
[email protected]
no later than November 1.
Answer to last month's
question: China
DID YOU KNOW
PJM Avoided Rolling
Blackouts with DR in
September.
During two days in September,
demand for power was higher
in PJM than any other day this
summer, except July 18th.
MARKET OUTLOOK
The Million Dollar Question: What will natural gas and electricity prices be
this winter?
As we rapidly approach another winter, many wonder what is going to
happen. Will it be a winter like the winter of 2011/12, or will it be like
Peak demand reached 144,370
MWs on Tuesday, September
10th and was headed even
higher on Wednesday,
ConEdison Solutions, Current Scoop, October 2013
2012/13? Or, even worse, will it be colder than the winter of 2012/13?
Weather aside, there have been some natural gas market developments
that will help supply natural gas when demand is at its greatest. There is
new natural gas pipeline capacity coming online November 1st and
delivering additional volumes to New York City. As a result, low-cost
Marcellus shale production will be able to flow more freely into the New
York City market. Over time, this additional capacity is expected to alleviate
the capacity constraints in New York City and limit most of the price spikes
seen recently.
For the New England markets, the picture is a little more complicated.
There is not enough pipeline capacity to deliver shale production gas to
meet demand created by heating load and power generation. However, the
New England market is buoyed by natural gas flowing from Canada and offshore LNG terminals. The current fixed price natural gas in the peak winter
months supports the movement of LNG into the New England markets. Our
expectation is that LNG cargoes will be available on the higher load days in
New England.
A second new ISO-NE market development is the natural gas production
from Deep Panuke flowing from Canada into the U.S., which should be
available to meet a portion of New England's peak natural gas load.
These two market developments in ISO-NE will provide additional natural
gas and may mute the severity of the price spikes, but not the number of
price spikes that will occur.
There is a lot of shale production available, but the underlying question in
all markets is whether or not there is enough pipeline capacity to deliver
production gas to markets when peak demand is at its greatest. For New
York demand, the answer is "Yes." As for New England, the answer in the
near term is "No." We expect to see more expensive gas and a greater
number of price spikes in New England as compared to the New York and
PJM markets. As natural gas is expected to be the marginal fuel for much of
the winter, the fundamental effect will keep New England power prices at a
significant premium compared to the surrounding market areas. NATURAL GAS UPDATE
The graph below illustrates 12-month natural gas forward strip prices from
January 2009 through September 2013. September 11th. The heat,
combined with equipment
outages, caused PJM to call for
rolling blackouts in its western
territory on Tuesday, September
10th, but PJM was able to avoid
those rolling blackouts on
Wednesday, September 11th, by
dispatching 5,949 MWs of DR,
the largest amount ever called
for.
"Generation performance and
demand response played
significant roles in balancing the
supply and the demand on the
grid during unusual conditions
[that] week," said PJM Executive
VP of Markets, Andy Ott, in
prepared remarks. "PJM
continues to see the value and
success of demand response in
PJM's markets." WEATHER
(Best on the Web)
ACCUWEATHER.COM
The regular weather provider
for Bloomberg Television and
numerous local TV stations.
WEATHER.COM
An American cable and
satellite television network
that, since May 2, 1982,
broadcasts weather forecasts
and weather-related news.
REGULATORY UPDATES
ERCOT's ORDC Policy Change
A major policy change was just adopted in ERCOT, called the Operating
Reserve Demand Curve (ORDC), and will impact how real-time prices are
formed. The details are still being discussed, however, we expect a version
to be in place before next summer. The ORDC will incorporate an adder to
prices, based on the quantity of total reserves available, in order to better
tie prices to the risk of an outage.
With many reserves still available in the system, this adder should be zero
or very low; however, when fewer reserves are available, this adder can
increase. In today's market, we often experience low prices even when
relatively few reserves remain. This adder will be incorporated into
settlement prices, though it will be separately published in the market.
The overall impact is difficult to gauge; however, it is likely to be relatively
modest, especially compared to several of the proposals that were under
ConEdison Solutions, Current Scoop, October 2013
consideration. In terms of what passed, on one hand, we are likely to see a
relatively small price adder in many time intervals. On the other hand, we
may reach the system-wide offer cap less often, since the administrative
price floors on certain reserves will have to be undone.
Currently, the system-wide offer cap is $5,000 per megawatt hour and is set
to increase to $7,000 per megawatt hour in June 2014, and $9,000 per
megawatt hour in June 2015.
One additional note is that, as proposed, the ORDC could enable prices to
reach $9,000/MWh in 2014 (one year ahead of schedule), since the price
adder will be based on a fixed value set by the commission of $9,000/MWh.
EXECUTIVE PERSPECTIVE
Green Initiatives from the New York State PSC
by Stephen Wemple, VP of Regulatory Affairs
The New York State Public Service Commission (PSC) is
seeking comments on three significant green initiatives,
consisting of enhancements to both its Renewable
Portfolio Standard (RPS) and Energy Efficiency Portfolio
Standard (EEPS) and the creation of the New York Green
Bank (NYGB). The PSC held a joint Technical Conference on Tuesday,
October 15, 2013 to explain each of the three initiatives and is requesting
formal comments by October 28, 2013, with reply comments due on
November 12, 2013.
On the RPS program, NYSERDA is requesting that the PSC explicitly identify
the source of funding for the NY-Sun program in 2014 and 2015, and allow
NYSERDA the flexibility to periodically adjust how funds are allocated
between the Standard Offer and Competitive Photovoltaic (PV) Programs.
NYSERDA is also looking to structure the Standard Offer PV program as a
MW Block Program. This would entail a defined incentive level available on
a regional basis for PV projects up to a given block of megawatts, and lower
incentive levels for subsequent MW blocks. The Competitive PV program for
larger installations would transition into a MW Block Program by 2015.
The EEPS Restructuring Proposal consists of two phases. Phase 1 proposes
changes for 2014 to 2015 to streamline and create more flexibility among
programs, in part because there are 93 different energy efficiency programs
administered by NYSERDA, the six investor-owned electric utilities, and the
eleven gas companies. Phase 2 initially proposes setting goals for 2016 to
2020 to be coordinated with State Energy Plan, with the aim of having both
the NYSERDA and utility programs used as tools to meet a joint regional
goal. Another long-term goal is to make the programs fuel-neutral so that
efficiency measures could be implemented more consistently throughout
the state. Possible options for fuel-neutrality include pooling gas and
electric funds or relying solely on electric surcharges on the basis that all gas
customers are electric customers.
In its NYGB proposal, NYSERDA is requesting $166 million of funds from
other NYSERDA and utility programs to provide initial capital to create the
NYGB. As proposed by Governor Cuomo in his 2013 State of the State
address, the NYGB is a $1 billion initiative intended to stimulate capital
markets to finance clean energy projects. ConEdison Solutions is
participating in these significant proceedings and is likely to recommend
that each of the programs (RPS, EEPS, and NYGB) be structured to be
seamless and consistent throughout the state. Ideally, we would like to see
the programs available on a consistent basis to all customers regardless of
which utility territory the customer is located in or whether the customer is
a NYPA or LIPA customer.
© 2013 ConEdison Solutions
Click here for a PDF of the October Current Scoop
DISCLAIMER: While much of the information provided in this newsletter is
based on the insights of energy experts, these statements are opinions and
should not be taken as fact.This newsletter provides an overview of the energy
ConEdison Solutions, Current Scoop, October 2013
market as a courtesy to our customers. It is not a commodity investment tool.
The information accurately describes issues in the energy markets at the time
of publication. Due to market volatility, however, ConEdison Solutions can only
guarantee accuracy up to the publication and distribution date of the
newsletter.
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ConEdison Solutions, Current Scoop, October 2013