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Energy Market Update: December 19, 2018

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2020 regional fixed prices for energy have been on a run lately (and not in a buyer-friendly way). Why are prices in some regions spiking, while others are not? What are the risk factors driving these prices, and what should we be aware of moving into the new year? 

Join Direct Energy Business Strategist Tim Bigler for a region-by-region look:

New England

This region is fed by the Algonquin pipeline (among others). Because the region depends on natural gas for much of its energy, there is a particular risk factor during winter when storage levels are low.


This market has done nothing but go up. Although a good deal of renewable projects have come online in California, the need for fossil fuels is not going away. To add to that, constraints on natural gas supply have driven prices even higher.


Despite some early-year volatility, prices here have stayed fairly stable recently. This could be thanks to some new pipeline projects which have come online and kept gas prices in check.

PJM West Hub

Risk premiums are driving prices up here. Looking back about a year ago, natural gas futures for 2019, 2020, 2021 and 2022 were about the same. 2019 began to separate from the others, and now what we are seeing could be the same kind of separation from 2020.

ERCOT North Zone

ERCOT has been subject to concerns about its low reserve margin thanks to recent announcements to that effect. So prices in this region reflect those worries (which are most prescient during the summer months) as well as the price of natural gas.


NYISO has proposed some new modeling for this zone. This fact along with questions about a lack of liquidity in this zone have driven prices up for 2020. Previously, these prices were discounted compared to 2021; we are seeing them catch up now as a result of the modeling and liquidity risk factors.


Natural gas and coal prices have been stable in the midcontinent, so ComEd has been fairly stable as well. Interestingly, ComEd prices have been neck-and-neck with other regions in the recent past (for instance, ERCOT and NYISO Zone A in August 2017). Now, however, they are comparatively quite low. What does this tell us? Prices in other regions have gone up, and while ComEd has not followed the trend, nothing (especially nothing good) lasts forever. So while no one can say for certain what will happen, it may be a good time for ComEd buyers to lock in a fixed price before this region follows suit with the others.

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Posted: December 19, 2018