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Energy Market Update: June 12, 2019

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Believe it or not, 2020 isn’t too far off. At this point, many regions are falling into one of three patterns when it comes to wholesale around-the-clock energy prices for next year. Curious where your region lands? Join Direct Energy Business Strategist Tim Bigler for this week’s Energy Market Update:

High Flyers: New England, CAISO SP15 (Southern California), NYISO Zone J (NYC)

Wholesale energy prices in these three areas are distinctly higher than elsewhere in the country. In New England and NYISO, cheap natural gas and the introduction of gas-burning plants with superior heat rates (meaning that they require less gas to produce the same energy as older plants) have tempered prices somewhat, tamping them down to roughly mid-2018 levels. This is a welcome drop for buyers, for whom 2019 had brought near-all-time-high prices. CAISO also saw a recent price drop, but supply and pipeline issues on the West Coast have already driven prices so high this year that today’s prices are not particularly low in relation to the status quo of the last two years.

Convergers: PJM West Hub, NYISO West A, ERCOT North 345KV Hub

Prices have converged in this group despite NYISO West’s historically low prices in 2017 and 2018. More recently, prices in these three areas have decreased in tandem, again thanks to the influence of inexpensive natural gas and new, more efficient power plants.

The Outlier: PJM ComEd

A high concentration of coal supply around the Chicago area has kept energy prices low. Add in the natural gas supply and heat rate factors which are affecting prices in the rest of the country, and the result is a potentially favorable buying situation in this region (though prices could conceivably go even lower from here).

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Posted: June 12, 2019