DOE EIA Weekly Gas Storage Report
Working gas in storage was 3,193 Bcf as of Friday, August 28, 2015, according to EIA estimates. This represents a net increase of 94 Bcf from the previous week. Stocks were 495 Bcf higher than last year at this time and 122 Bcf above the 5-year average of 3,071 Bcf
EIA to estimate 83-87 Bcf
Actual 94 Bcf
An injection within that range would be more than the 79-Bcf build reported in the comparable week of 2014 and the 60-Bcf five year-average increase, EIA data showed. Discussing the possible effect of a high injection number Thursday, Santiago Diaz, broker at INTL FC Stone, said “if the large injection trend continues, it will translate towards more downward pressure on prices.” It is not unusual for natural gas storage injections to reach this size, but what is unusual is how early large injections are arriving. “With the third week of September traditionally marking the low point in the season for weather-related demand, this pattern change appears to be running close to schedule”
Weekly Basis Report
Here is the weekly basis report which is representing the future price change when trading natural gas, the quoted price is the difference between the Henry Hub price and a specific location’s price – called the basis price. A basis position is one that has exposure to two different locations: the Henry Hub and separate location’s price.
Here are some basic understanding on how to measure natural gas:
A BTU is the amount of heat required to increase the temperature of a pint of water (which weighs exactly 16 ounces) by one degree Fahrenheit.
Since BTUs are measurements of energy consumption, they can be converted directly to kilowatt-hours (3412 BTUs = 1 kWh) or joules (1 BTU = 1,055.06 joules).
MBTU stands for one million BTUs, which can also be expressed as one decatherm (10 therms). MBTU is occasionally used as a standard unit of measurement for natural gas, and provides a convenient basis for comparing the energy content of various grades of natural gas and other fuels.
One cubic foot of natural gas produces approximately 1,000 BTUs, so 1,000 cu.ft. of gas are comparable to 1 MBTU.
MBTU is occasionally expressed as MMBTU, which is intended to represent a thousand thousand BTUs
Cogeneration is not Deregulation
Indiana is in the midst of trying to address its high cost of electricity. Two trade associations are facing off; the industrial trade association wants to be able to build cogeneration plants (very efficient plants that produce electricity and heat) while the utility trade association doesn’t want competition on other energy sources. Both trade associations miss the evolution of energy deregulation.
Energy deregulation started during the oil crisis (late 1970s early 80s) and initially the “deregulation” manifested as competition on constructing new power plants. That is: before a utility could build a new power plant, it had to put out to bid what it was going to build and the price and see if others could build it for less and with different fuels.
The second phase of energy deregulation occurred with energy supply to customers (natural gas and electricity). First came large energy users followed over time by residential consumers. During this phase of energy deregulation, the utility became a delivery company and the energy supply (natural gas or electricity) could be purchased from the utility or other energy suppliers.
A review of the facts of energy deregulation over the last 30+ years illustrates:
- The utility model of regulated competition has been demonstrated to cost more than direct competition.
- Power plants should be sited to allow for the efficient use of its output (both the heat and the electricity)
- Customer should be allowed to choose their energy supply. Competition for retail customers in energy supply has demonstrated lower costs, improved efficiency and greater service options.
- Utilities should continue to operate their monopoly on energy delivery
Hopefully, the Indiana legislators review the history and benefits from energy deregulation.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Service Plans include Guaranteed SavingsTM, MangedPriceTM, ManagedGreenTM and Index, Fixed pricing.
Additional information: www.realgyenergyservices.com
Supporting Article:
EIA Weekly Natural Gas Storage Report
Working gas in storage was 3,099 Bcf as of Friday, August 21, 2015, according to EIA estimates. This represents a net increase of 69 Bcf from the previous week. Stocks were 480 Bcf higher than last year at this time and 88 Bcf above the 5-year average of 3,011 Bcf.
EIA estimate 58-62 Bcf
Actual 69
A consensus of analysts surveyed by Platts expects the US Energy Information Administration on Thursday will estimate a natural gas storage injection of between 58 Bcf and 62 Bcf for the reporting week that ended August 21. An injection within expectations would be less than the 77-Bcf injection reported at this time in 2014 and similar to the 61-Bcf five-year average injection, according to EIA data. The wider range of analysts’ expectations for this week was for an injection of 47 Bcf to 67 Bcf. “US demand rose modestly from the previous week and averaged just above 64.5 Bcf/d during the week,” said Bentek Energy, an analytics and forecasting unit of Platts. “However, this did not translate to lower injection activity, as Bentek’s sample injections increased within both the East and Producing regions compared to the previous week.”
DC Regulators reject Exelon; no public benefit
A public utility actions (expenses) must benefit the public; simple right but so often this is not the focus of the utility executives or the regulators.
Reviewing the cost vs. benefits the regulators in Washington, DC rejected Exelon’s bid for BGE citing that Exelon’s takeover did not demonstrate benefits to its customers. Bravo!
As previously cited, there is little reason for a public utility to acquire another utility, especially one that does not share a border.
Putting the focus on customer benefits verse stockholders the DC regulators did their job. Applause.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Service Plans include; Guaranteed SavingsTM, MangedPriceTM, ManagedGreenTM and Index, Fixed pricing.
Additional information: www.realgyenergyservices.com
Supporting Article:
http://realgyenergyservices.com/comed-parent-company-pay-6800000000-east-coast-utility/
http://www.energybiz.com/article/15/08/dc-regulators-reject-proposed-merger-exelon-pepco?utm_source=2015_08_26&utm_medium=eNL&utm_campaign=EB_DAILY&utm_content=4521
Weekly Basis Report
DEFINITION of ‘Futures Market’
An auction market in which participants buy and sell commodity/future contracts for delivery on a specified future date. Trading is carried on through open yelling and hand signals in a trading pit.
Read more: http://www.investopedia.com/terms/f/futuresmarket.asp#ixzz3in48jxPn
Is DTE afraid of competition?
Michigan utilities lobbied hard to reduce the Michigan Customer Choice program to no more than 10%. That is; only 10% of Michigan customers can chose an energy supplier (all customers still get energy delivered by the utility). The result; those that are in the 10% are enjoying savings compared to their utility. One example in Michigan, 400 public schools saved over $40 MILLION last year. On average, states without competition through energy choice pay 25% more than states with customer choice.
Examples of two different states: one with customer choice and one without:
In Illinois (with customer choice), competition saved over $37 BILLION: http://realgyenergyservices.com/competition-work-tune-37-billion/
In Indiana (without customer choice), ranking on lowest states for electricity costs went from 5th lowest in the Nation in 2003 to 26th in 2014 (electric rates went up)! http://realgyenergyservices.com/indianas-electric-rate-hurts-competitiveness/
So why not expand Customer Choice for 100% of customers? According to DTE their reasons are:
- There will be a shortage of energy supply
- We do it in Ohio and elsewhere and that different
These reasons are throwback to the 1950s. DTE is not responsible for energy supply in the state this ended long ago. A larger regional entity called MISO is. DTE supports customer choice in Ohio and elsewhere. The apparent reason Michigan does not having a robust customer choice market; incumbent utilities donate/lobby legislators that in turn support the utilities.
Realgy supports customer choice for energy. Our experience has demonstrated that it saves consumers time and money in energy use and decisions.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings.
Additional information: www.realgyenergyservices.com
Supporting Article: http://blogs.detroitnews.com/politics/2015/08/11/charged-dte-misses-point-choice-works/
Chicago Weekly Basis Report
Here is exert from a finance book about Derivatives securities which correlates to the basis market because it can generate a higher rate of returns in the future.
Derivative securities (also called derivatives) are financial contracts whose values are derived from the values of underlying financial assets (such as securities). Each derivative security’s value tends to be related to the value of the underlying security in a manner that is understood by firms and investors. Consequently, derivative securities allow firms and investors to take positions in the securities on the basis of their expectations of movements in the underlying financial assets. In particular, investors commonly speculate on expected movements in the value of the underlying financial asset without having to purchase the financial asset. In many cases, a speculative investment in the derivative position can generate a much higher return than the same investment in the underlying financial asset. However, such an investment will also result in a much higher level of risk for the investors. Derivative securities are used not only to take speculative positions but also to hedge, or reduce exposure to risk. For example, firms that are adversely affected by interest rate movements can take a particular position in derivative securities that can offset the effects of interest rate movements. By reducing a firm’s exposure to some external force, derivative securities can reduce its risk
MidAmerican aiming for 57% of energy from wind
In another sign of the growing importance of renewable energy, MidAmerican is proposing to construct a wind farm in Iowa that could provide more than HALF of the total energy it delivers.
Certainly more will be heard once the federal government releases more details about the Clean Power Rules. However, this is another example of how renewable energy (solar, wind and hydro) is becoming more common and reliable.
Consider that a utility like MidAmerican, that has tremendous coal resources, is willing to commit more than half of its expected need to renewable energy is a testament to the reality of climate change and that renewable energy is economically competitive.
May the times, continue to change.
Supporting Article:
What should the cost of electricity be?
What should the cost of electricity be?
Electric utilities are paid based on maintaining their distribution network (wire, poles, transformers, etc.) within their service area and receiving payments based on the cost of providing that service plus a profit. The electric utility business is a monopoly in that there is no competition to their service; therefore, their costs get scrutinized to determine if they were spent appropriately. Those costs that are deemed appropriately spent on necessary service are repaid plus a profit.
However, the price of electricity is no longer a monopoly. Electric pricing in Illinois is based on market conditions of supply and demand.
Most electric power in Illinois is purchased by customers (not utilities) and those purchases are direct between the customer and the energy supplier (marketer). That actual electricity comes from power plants. All the electricity purchased by customers flows through the utilities distribution network (COMED, Ameren or MidAmerican).
Large electric generators, like nuclear power plants, receive preference in operating due to the fact that they are most efficient when operating at full power. Smaller generators including coal and solar plants bid a price in the hopes of selling energy at that price.
Exelon, the owner of several nuclear power plants, is threatening to shut down 1 or more plants in Illinois UNLESS they get paid more.
Exelon is the parent company that owns many electric power plants and four large utilities (including ComEd and BGE).
Exelon’s threat seems to be a case of having your cake and eating it. They own utilities so they earn profit for spending money to provide service and they own power plants that must compete to earn money. They know the difference and should not try to alter market pricing to get preferred pricing.
Illinois should not reward Exelon’s bullying with more profit. The market can make up for the loss of electricity from shutting down inefficient power plants.
Realgy Energy Services is a registered Retail Energy Marketer in the states of Illinois, Michigan and Indiana. We offer Service Plans that will provide electric and natural gas at wholesale pricing direct to customers without any utility markup. Our Service Plans work with the local utility to provide seamless service and annual energy savings. Additional information: www.realgyenergyservices.com
Supporting Articles: