polar vortex = strong demand
DESCRIPTION
How Should Customers Respond to The Winter 2014 Electricity Price Spikes? October 8, 2014 Ron Aberizk Sr. Sales Manager, Direct – Upstate NY. Polar Vortex = Strong Demand. Jan 2014 GWHDDs = 1048 GWHDD 10YA = 931 15 th coldest since 1950. Feb 2014 GWHDDs = 883 GWHDD 10YA = 796 - PowerPoint PPT PresentationTRANSCRIPT
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How Should Customers Respond to The Winter 2014 Electricity Price Spikes?
October 8, 2014
Ron AberizkSr. Sales Manager,
Direct – Upstate NY
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Polar Vortex = Strong Demand• Persistent, large-scale cyclone
(intense area of low pressure) located near both poles.
• Stronger in the winter.• Associated with extreme cold, but
typically reside near/within the Arctic/Antarctic.
Jan 2014• GWHDDs = 1048• GWHDD 10YA = 931• 15th coldest since
1950
Feb 2014• GWHDDs = 883• GWHDD 10YA = 796• 8th coldest since
1950
Impact on energy markets:• New York spot price spiked for natural
gas and electricity• NYMEX spot natural gas increased to
5-year highs (One month forward)
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Jan14 NYISO Gas/Power Prices Increased West to East
Western zones hadlower gas/power prices
due to lower consumption and less gas constraints
Western Zones have more coal/hydro than east
Eastern zones had
Higher gas/power pricesdue to higher consumption
and gas constraints
Zone F can deliver powerto ISO-NE
Zone F & ISO-NE prices highly correlated
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Daily NYISO Average Costs/MWh
2014 LBMP Average Cost/ MWH
2013 LBMP Average Cost/ MWH
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NYISO Zone A vs. Dominion South Port
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$0
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NY Zone A DA Dom South Pt + .40
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NYISO Zone G vs. Tennessee Zone 6
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$0
$50
$100
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NY Zone G DA Tenn Zone 6
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NYISO Regional Issues• NYISO set new peak records
o New, all-time record peak set July 9, 2013 - 33,956 MWo New winter peak reached in January 7, 2014 - 25,738 MW
• Peak demand expected to outgrow electrical usageover next 10 years
o Peak demand projected to grow at average annual rate of 0.83%o Overall usage forecast to grow at average annual rate of 0.16%
• Power plant retirements outpaced additionso Resource margins remain positive, however . . .
o Surplus went from 5,000 MWs in 2012 to 1,900 MWs in 2014
• New York moving to diversify generation, but gas rules!o 2013 - 46% electric generation fueled by duel fuel (gas&oil)
o More than 70% of proposed power projects would be fueled by gas
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NYISO Reliability Concerns Reflected in Capacity Prices
NYISO
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NYISO Generation Addition and Removal
Selkirk Units 1&2 notice of mothballing withdrawn 9/14
+ 348MW
Danskammer back to service
+ 494MW
Total 842MW
527MW Deficiency
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WEATHER OUTLOOK – THIS OR ?
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NWS Dec-Feb ABOVE Normal Temps Northern U.S.
NOAA; NWS
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Farmer’s Almanac- Winter 2014-2015
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RESPONSE
• Know your objectives and risk tolerances/ Quick Reactions
• Gas pipeline situation unchanged from last winter
• Upside risk greater than downside
• Weather “risk” premiums may only diminish closer in
• Power – potential transmission/capacity increases
• Energy Budget Strategy should include:
– Ability to act quickly if gas/power price decline or increase
above budget targets
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QUESTIONS ?