3 Reasons Why FERC Believes This Winter’s Energy Demand Will Be Met

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Two years ago, extreme weather caused unprecedented winter peak demand.

This past week, the Federal Energy Regulatory Commission (FERC), released its 2015-2016 Winter Energy Market Assessment to assess the ability of grid operators and power markets to meet this winter’s anticipated energy demand.

Here are some of the key findings from FERC’s assessment.

The U.S. natural gas market is well-supplied

Natural gas inventories are poised to a set a new record of 4 Tcf (trillion cubic feet) by the end of injection season. According to the assessment, storage inventories  began this year’s injection season below the five-year average, but refilled rapidly throughout the spring and summer as record production far outpaced demand.

Warmer-than-usual temperatures will help mitigate peak demand

Unlike the previous two winters, FERC anticipates average temperatures will help lower natural gas demand, especially in the Midwest and Northeast. Additionally, FERC believes the deliverability and scarcity issues that arose during the polar vortex of 2014 have been largely addressed, further mitigating any weather concerns.  

Pipeline expansions will provide more transportation capacity

FERC believes that new pipeline expansions and projects to reverse gas flows on certain pipelines will allow increased transportation capacity from production areas to key demand regions, except for New England.

Conclusion

With anticipated record highs in gas storage and production, a mild winter forecast, and new pipeline expansions, FERC believes that grid operators and power markets will be able to sufficiently meet this winter’s energy demand.

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You can read FERC’s full assessment here. For further analysis, be sure to check out this week’s special edition of the Weekly Energy Market Update.

Posted: October 21, 2015