Energy Market Intelligence

Michael Constantine

Michael Constantine
Mr. Constantine oversees all aspects of the day-to-day operations of the firm. He is looked upon as the wholesale to retail energy market expert and has participated in the wholesale energy markets for more than 15 years. Mr. Constantine is the former VP, Market Operations and Trading at Constellation Commodities, NewEnergy Division. In this position he led the electricity and gas portfolio management groups in 15 states, Washington D.C. and two Canadian provinces that supplied more than 15,500MW of peak load. While at Constellation, he had management responsibility for all renewable portfolios, the wholesale market technical sales force, wholesale back-office functions, settlements and other roles. He also was a member of Constellation’s Corporate Risk Committee and Corporate Commitments Committee. Most recently, Mr. Constantine was the Managing Director of Portfolio Management at Edison International, where he developed innovative portfolio management strategies, market execution, risk management, and where he was responsible for one of the largest renewable generation portfolios in the US. He was Edison’s Enterprise Portfolio Planning and Asset Valuation Leader. Mr. Constantine began his career in wholesale power trading on the 24-hour real-time trading desk at New Energy Ventures. Previously, he was in the financial services sector with Fidelity Investments and Eaton Vance.
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Recent Posts

electricity captag iso

Understanding "Cap Tag" and Why it Matters

A cap tag is a measure of a customer’s electricity usage when the overall demand on the grid is high. More formally called a PLC (Peak Load Contribution), it is a kW value during the hour or hours, depending on the ISO when the grid is at its annual peak load. These peak hours occur during the summer and then drive a customer’s costs for the following June to May year. The grid operators need to ensure that there is enough generation capacity in the system to produce power at high load times so the load is charged based on their contribution to the system peak. Cap tags affect overall energy pricing and determine how much a customer pays for capacity during the year.

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pjm AUCTION BRA forwardpricing

PJM Posts the Results for the Current Base Residual Auction

PJM announced the annual capacity auction base residual results this afternoon and the RTO price almost touched one of the all-time low prices of $40/MW-day again, as the RTO region cleared at $50/MW-day in this auction.  The Base Residual Auction (BRA) was set up to clear lower due to the lower forward load forecasts expected during this planning year period from covid restrictions and the majority of the older and less efficient/higher cost units being previously retired.  Even with those bearish indicators prices were expected to clear higher given the uncertainty around the new auction rules.  The last time PJM ran the BRA in 2018 RTO prices hit $140/MW-day but cleared lower this time and there was not much separation between the eastern and western zones for this auction with only BGE cracking the $100/MW-day price level and the other zones progressively moving lower the further west you go in PJM.   PJM is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia for 65 million people.  Auctions are usually held three years in advance of the delivery year.  The 2022/2023 auction was originally scheduled to be held in May 2019 but was postponed due to pending approval from FERC of capacity market Minimum Offer Price Rules (MOPR).

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EIA projects switching from natural gas electricity generation to coal electricity generation this summer

The US Energy Information Administration’s (EIA) April Short-Term Energy Outlook (STEO) is projecting natural gas electricity generation to coal electricity generation switching this summer.  The EIA is projecting overall US natural gas consumption to decline in 2021 and 2022 as it did in 2020.  The total natural gas consumption declined in 2020 mainly as a result of slowdowns from the COVID-19 pandemic, along with milder temperatures and lower heating demand.  The forecast is for less natural gas consumption in 2021 from electricity generation and the EIA is quoted: “Natural gas prices in 2019 and 2020 were historically low, making natural gas more competitive with coal for generating electric power.

However, because forecast natural gas prices will be higher and more renewable capacity will come online in 2021 and 2022, we expect more electricity generation will come from coal and renewables and less from natural gas.”  The EIA is forecasting Henry Hub spot natural gas prices to average $3.04/MMBtu in 2021, which would be higher than the 2020 average of $2.03/MMBtu.  So far in 2021, MISO has had the largest market share gain for coal electricity generation, as 40% of 2021 total generation is from coal compared to 30% in 2020.  In SPP, the total coal generation market share has jumped about 7%, while there is a 6% jump in PJM and a 4% increase in ERCOT.  The EIA projects that US-wide coal-fired electricity generation share will rise to 22% in 2021 and to 23% in 2022, which is up from 20% in 2020.  US-wide natural gas electricity production is down about 7% so far this year.  The EIA is forecasting the US-wide share of natural gas electricity generation to average 36% in 2021, 35% in 2022, which is down from 39% in 2020.

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SC studying electricity market reforms, gas and power forwards hold low marks

South Carolina legislature proposes studying changes to electricity market. Bearish gas and power markets don’t budge with strong storage numbers, new POTED SOS rates filed, and MA governor announces zero emissions goal by 2050.

Natural Gas

  • The February 2020 NYMEX Henry Hub forward contract decreased to $1.905/MMBtu, a $0.22 (-10.1%) decrease from the previous Wednesday. The price of the 12-month strip averaging February 2020 through January 2021 futures contracts decreased $0.13 (-5.9%) to $2.156/MMBtu.

  • For the week ending January 17, the EIA reported net withdrawals from storage of 92 Bcf, which is lower than last year’s net withdrawals of 152 Bcf for this week and lower than the 5-year (2014–18) average net withdrawals of 194 Bcf.

  • Working natural gas in storage totaled 2,947 Bcf, which is 554 Bcf (23.2%) higher than last year’s working gas totals of 2,393 Bcf at the same time and 251 Bcf (9.3%) higher than the 5-year (2014-2018) average of 2,696 Bcf. Total working gas is within the five-year historical range.
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Power


  • The ISONE Mass Hub On-Peak Summer 2020 forward electricity strip is up 2.2% week over week, but is down 26.3% in the last year.

  • For those looking to hedge their ISONE Mass Hub On-Peak load, we see value in hedging the March 2020 through November 2021 periods. Contact TrueLight to stay on top of value in current forward curve pricing and learn more about our portfolio management execution expertise.

 

Utility Highlight

  • Our forward headroom models indicate there is headroom starting February 1, 2020 for 3, 6, 12, 24 and 36 month contracts for Massachusetts' WMECO Small General Service (G0) customers.

  • Maryland’s Potomac Edison (POTED) released proposed SOS rates for residential customers effective June 1, 2020 through May 31, 2021 and new Type II rates effective March 1, 2020 through May 31, 2020. The residential Electric Supply Charge, which is the primary component of the price-to-compare, will be 12% lower than the current rate and 5% lower than last year’s summer rate. Let TrueLight help you stay on top of current rates and subscribe to our PTC tracking and headroom reporting or use our price verification service to ensure you stay on top of all utility rate changes.

Clean Energy

  • Governor Charlie Baker of Massachusetts announced his intention to set a statewide goal of net-zero carbon emissions by 2050 in his State of the Commonwealth address last week. This target improves upon the existing targets of 25% emissions reductions by 2020 and 80% emissions reductions by 2050 relative to 1990 levels, both of which were set by the 2008 Global Warming Solutions Act. Baker reaffirmed the state’s commitment to the Transportation Climate Initiative (TCI), which is a proposed cap and trade program for gasoline and diesel emissions. A bill to implement the net zero emissions target was introduced in the Massachusetts House of Representatives last Thursday as well. Contact us for advice on renewable generation project development.

Market Intelligence

  • Legislators in South Carolina introduced a bill in the state Senate that would establish a committee to study electricity market reforms. The Electricity Market Reform Measures Study Committee would be tasked with examining the possibility of creating or joining a regional transmission organization (RTO), divesting generation and transmission assets within its monopolistic utilities, developing retail electricity choice, and allowing community choice aggregations among other proposals. Although the bill has yet to be passed in both of the state’s legislative houses, the bill demonstrates an interest in reassessing South Carolina’s current vertically integrated electricity market model. Contact TrueLight Support for analysis of the most up-to-date energy market news or use our price verification service to ensure the most recent market shifts are reflected in your price quotes.

 
 

Weather

  • The 8-14 day forecast beginning February 4th includes above average temperatures for the East coast and average to below-average temperatures for the Midwest and West. Most of the country is expected to see wetter than average conditions, with the exception of the West Coast experiencing lower than average precipitation.

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Power and gas stay low, cooler weather to come in the West

Power and natural gas prices remained low through the holidays. Cooler weather is forecasted for the West, headroom is available in IL, and VA proposes retail choice legislation.

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Forward gas and power continue to fall, suppliers ask for rehearing of NY PSC Reset Order

Forward gas and power prices tumble with strong gas storage numbers. NY PSC’s Reset Order for ESCO participation causes complaints from RESA and suppliers, headroom is available in OH, and NJ passes EV adoption bill.

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Power prices in ERCOT continue the upward trend with gains along the entirety of the forward curve, while ISONE, NYISO, and PJM trend downwards

TrueMarket Update

Providing you an analytical snapshot of weekly energy price movements, retail electricity headroom opportunities, and weather trends. 

General Update

gen10092018
  • Financial gas markets trade higher, with the contract for November 2018 rising $0.25 (8.4%) to $3.230/MMBtu. The 12-month strip averaging November 2018 through October 2019 futures contracts climbed $0.12 (4.3%) to finish the week at $2.931/MMBtu.
  • Physical gas spot prices were mixed. Boston’s Algonquin Citygate increased $0.37 (11.4%) to $3.60/MMBtu. Transco Zone 6 NYC increased $0.44 (15.4%) to $3.29/MMBtu.
  • Tennessee Zone 4 also increased, rising $0.22 (13%) to $1.92/MMBtu. Dominion South, serving southwest Pennsylvania, fell $0.07 (-3.2%) to $2.09/MMBtu. Chicago Citygate prices increased $0.29/MMBtu (10%) to $3.18/MMBtu, a weekly high.
  • SoCal Citygate prices increased $0.72 (19.4%) to finish at $4.42/MMBtu. Prices at Northern California PG&E Citygate increased $0.22 (6.7%) to $3.50/MMBtu.
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ERCOT power prices still on the rise as concerns of a continually tight supply stack drive up the forward curve; Below normal temps in western U.S. due to trough of cooler air from Canada.

TrueMarket Update

Providing you an analytical snapshot of weekly energy price movements, retail electricity headroom opportunities, and weather trends. 

General Update

gen10022018
  • Financial gas markets trade higher, with the October 2018 NYMEX contract increasing $0.11 (3.9%) to expire at $3.021/MMBtu on September 26, 2018. The contract for November 2018 rose $0.10 (3.5%) to $2.980/MMBtu.
  • Physical gas spot prices were mixed. Boston’s Algonquin Citygate increased $0.32 (11%) to $3.23/MMBtu. Transco Zone 6 NYC decreased $0.16 (-5.3%) to $2.85/MMBtu.
  • Tennessee Zone 4 also decreased, falling $0.85 (-33.3%) to $1.70/MMBtu. Dominion South, serving southwest Pennsylvania, decreased $0.41 (-16%) to $2.16/MMBtu. Chicago Citygate prices fell $0.11/MMBtu (-3.6%) to $2.89/MMBtu.
  • SoCal Citygate prices decreased $0.88 (-19.2%) to finish at $3.70/MMBtu last week due to the fact that SoCal natural gas inventories were close to the maximum allowable capacity 83 Bcf. Prices at Northern California PG&E Citygate increased $0.19 (6.1%) to $3.28/MMBtu.
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Power curves in ERCOT see notable price gains farther out for Summer 2020; Physical gas spot markets trended upwards across most markets.

TrueMarket Update

Providing you an analytical snapshot of weekly energy price movements, retail electricity headroom opportunities, and weather trends. 

General Update

gen09252018
  • Financial gas markets trade higher, with the October 2018 NYMEX contract price rising $0.08 (1.2%) to finish at $2.908/MMBtu on Wednesday September 19, 2018.
  • In contrast to the widespread price decreases reported last week, physical gas spot prices trended upwards across most markets. Boston’s Algonquin Citygate increased $0.16 (5.8%) to $2.91/MMBtu, with a high of $3.00/MMBtu on Monday September 17. Transco Zone 6 NYC increased $0.10 (3.4%) to $3.01/MMBtu.
  • Tennessee Zone 4 also increased, rising $0.36 (16.4%) to $2.55/MMBtu. Dominion South, serving southwest Pennsylvania, increased $0.34 (15.2%) to $2.57/MMBtu. Chicago Citygate prices rose $0.28/MMBtu (10.3%) to $3.00/MMBtu.
  • SoCal Citygate prices jumped $1.03 (29%) to finish at $4.58/MMBtu last week. Prices at Northern California PG&E Citygate were unchanged week/week at $3.09/MMBtu.
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Power curves trended upwards across the board, with notable gains in NYISO, PJM, and ERCOT; Physical gas spot markets, on the other hand, saw widespread decreases.

TrueMarket Update

Providing you an analytical snapshot of weekly energy price movements, retail electricity headroom opportunities, and weather trends. 

General Update

gen09182018
  • Financial gas markets continue to trade higher. The October 2018 NYMEX contract price rose $0.03 (1.2%) to finish at $2.829/MMBtu on Wednesday September 12, 2018.
  • Price movements in the physical gas spot markets saw widespread decreases. Boston’s Algonquin Citygate decreased $0.36 (11.6%) to $2.75/MMBtu. Transco Zone 6 NYC decreased $0.15 (5%) to $2.91/MMBtu, with a weekly low of $2.50/MMBtu on Friday.
  • Tennessee Zone 4 decreased $0.30 (12%) to $2.19/MMBtu, with a weekly low of $2.16/MMBtu on Friday. Dominion South decreased $0.35 (13.6%) to $2.23/MMBtu. Chicago Citygate prices decreased $0.15/MMBtu (5.2%) to $2.72/MMBtu.
  • SoCal Citygate prices fell $0.71 (16.6%) to $3.55/MMBtu. As of Tuesday September 12, inventories have reached 78.2 Bcf, the highest recorded this year and up 2% from last week's levels of 76.5 Bcf. Prices at Northern California PG&E Citygate dropped $0.12 (3.7%) to $3.09/MMBtu.
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