Monthly Electric and Natural Gas Market Outlook | October

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We will be sharing our monthly electric and natural gas market outlook here on our LinkedIn page! Follow our page and stay tuned for these updates on how changes in that market could affect your energy costs.

Storage fill rate decreased - b u l l i s h

WEEKLY NYMEX FWD CURVE CHANGES – NOVEMBER IS OUR PROMPT MONTH

NYMEX

Prices are rising. The Prompt Month is at the highest level since July. Prices are up 44% over the past five weeks due to lower injections. Despite these lower injections in 19 of the past 20 weeks, inventories are still above normal due to the mild winter last year. Also, 1.3 million homes and businesses in the Southeast remain without power after Hurricane Helene. NOV24, the new Prompt Month, gained 23￠ on the week. DEC24 gained 4￠. Winter is up 3￠ at 3.28. The hurricane did not interrupt infrastructure as originally predicted, but the demand for destruction is evident from Florida through North Carolina.

STORAGE

Working gas increased to 3,547 Bcf as of September 27th, with an injection of 55 bcf, equal to the week before. Storage is now 190 Bcf above the 5-year average, falling by 43 bcf. The rate of fill may be near analysts’ expectations, but the cushion over the five-year average is shrinking every week - bullish.

ONE WEEK CHANGE – NYMEX and OIL

WEATHER

October 3-9: Much of the US will be comfortable w/highs of 60s to 80s besides hotter 90s-100s across California, the SW, and portions of Texas, as well as cooler 50s near the Canadian border. Overall, Low to Very Low demand in the next 7 days.

Current Natural Gas Utility PTCs

On-Peak Power Pricing for Trading Years 2025 through 2027

• The On-Peak Strip began the year (baseline) at $54.50/MWh (Trading Year: 2026), $57.24/MWh (Trading Year: 2027), and $57.42/MWh (Trading Year: 2027).
• Since the beginning of this year, the 2025 strip decreased by $2.42 (4.17%), the 2026 strip decreased by $2.33 (2.20%), and the 2027 strip decreased by $2.92 (.40%).

Current Electric Utility PTCs

PJM CAPACITY AUCTION FOR 2025/26 RESULTS PRICES SPIKE

On July 17th, 2024, PJM held its Capacity Auction for Planning Year 2025/26. The results were published on July 30, 2024, and the rates are significantly higher than the previous year. Rates increased by 816% for most of PJM’s footprint. Most of PJM’s current Capacity rate is $29.50 per MW-year for 24/25, and the rate increased to $270.35 per MW-year for 25/26. The PJM Planning year runs from June 1st to May 31st.

The increase in rates was a result of:

1. Increased projected load growth in PJM
2. Decreased supply offers into the auction due to generator retirements of power plants and
3. FERC-approved market reforms to risk modeling for reserve margins.

PJM CEO Manu Ashthana stated “The significantly higher prices in this auction confirm our supply/demand balance is tightening across the RTO. The market is sending a price signal that should incent investment in resources.”

In the past year alone, supply declined by 6.6 GW of generation retiring or giving notice of intent to deactivate. With supply declining, demand has been increasing and is projected to increase more in the next few years due to new data centers being built across PJM’s footprint.

What does this mean for customers come June 2025?

For an 80% Load Factor customer, the increase in Capacity rates represents about a $0.012 per kWh increase in cost. This translates into about $12,000 annually for a customer that uses 1,000,000 kWh per year.