FERC Summer 2016 energy market and reliability report

Federal energy regulatory staff have presented their 2016 Summer Seasonal Assessment to the Federal Energy Regulatory Commission.  The "Summer 2016 Energy Market and Reliability Assessment" presents an summer outlook by FERC's Office of Electric Reliability and Office of Enforcement on electricity and natural gas markets and reliability issues.

Highlights include:

• "low natural gas prices that have resulted from robust production and near record levels of natural gas in storage"
• electric system reserve margins are expected to be adequate this summer, though tighter in Texas
• total U.S. load forecast, when weather-adjusted, is essentially unchanged in recent years, largely due to little to no load growth in commercial and residential sectors
• the total generating capacity in the U.S. has decreased by approximately 2 percent since last summer, primarily due to coal retirements. According to the report, "The factors that prompted these closures include increased competition from natural gas, environmental regulations and an average fleet age that exceeded 50 years old."
• Over 18 gigawatts of new generating capacity will be installed nationwide through the summer, with a majority of these capacity additions coming from renewables such as wind and solar, plus the first new U.S. nuclear unit in over 20 years.
• Organized markets are attempting to manage the growing impacts of renewable generation.
• FERC staff expects natural gas fired generation to remain robust; natural gas fired generation has surpassed coal plant output since July 2015. Meanwhile coal stockpiles are growing due to a decrease in coal generation.
• Natural gas future prices have fallen since last year, though the Boston region's price drop is not significant.  Basis swaps -- financial instruments that represent the natural gas price differential between a specific point and the Henry Hub -- for Boston are priced higher than last summer, "suggesting expectations for greater congestion due to above-normal temperatures and a reduction in capacity along the Algonquin pipeline because of planned maintenance to tie in the Algonquin Incremental Market (AIM) expansion project this summer."