Northeast US Next-Week Outlook - 10.30.09
Increasing Generator Outages to Boost PJM WH Heat Rate’s
SUMMARY: Temperatures will swing from warmer than normal this week, to cooler than normal next week. Weather related heating demand won’t increase in a meaningful enough way to shock electrical loads, however. Peak loads are expected to rise modestly. The Mid- Atlantic region can expect an increase in peak loads of about 2,000 MW, while NY may see an increase of 1,000 MW. This should boost heat rates in those regions and particularly in PJM where generator outages are expected to jump. A significant increase in generator out- ages in the Mid-Atlantic region will boost on-peak heat rates at West- ern Hub. Week over week, about 2,000 MW will become unavailable in eastern PJM; raising the regional total to around 14,500 MW. On- peak heat rates at PJM WH will likely rise to above 10,000 btu/kwh.
Next week also will mark the annual shift in the gas season. It is unclear, however, what affect this shift (from injection season to withdrawal season) will have on gas prices. We believe at least some of the recent rise in gas prices has been due to October voluntary shut-ins of production. It’s possible that a marginal rebound in production (in November) combined with gas withdrawals from storage will depress November prices from their re- cent delivered levels above $5.00/MMBtu. The 60 cent/MMBtu tumble in prices on Friday (for Monday delivery) may be the first signs of these combined effects. Gas price risk is high next week as a result