Energy Markets Report

September 16 - 20, 2013

Summary of Market Developments

• Electricity peak prices appeared to show sharp declines at the Northeast (NEPOOL) and PJM-West hubs last week, but the average prices at these hubs have hovered in a narrow range of $36-$42/MWh in the period September 2-20. Only a brief spike during the week of September 9, which raised the average of that week’s prices and, compared to last week’s, resulted in a week-over-week decline. “The price of power at the daily market moved mostly lower across the U.S. on Friday, Sept. 20, rounding out the week and the official summer season on the decline in tandem with demand forecasts and most natural gas markets. … Facing generally mild weather and a cheaper natural gas market, the price of power for Sept. 23 delivery moved lower in Texas and other parts of the South.” (SNL Energy’s Power Daily – September 23, 2013)
• Natural gas spot prices at the Henry Hub rose nine cents last week to average $3.67/MMBtu. “According to data from Bentek Energy LLC, total supply [of natural gas in the United States] fell 0.8%, with a production decline of 300 million cubic feet per day (0.4%) (partly due to Rockies losses), accounting for most of the decline in overall supply. On the demand side, residential and commercial consumption increased 20.9% this week [Sept. 11-18], a sign that seasonally cooler weather has arrived in some areas of the country. However, a 16.1% decline in gas consumption for power generation helped offset the increase in residential and commercial consumption, resulting in a 4% net decline in total consumption.” (EIA’s Natural Gas Weekly Update – September 19, 2013)
• Average U.S. nuclear plant availability fell slightly last week, to 89 percent. Pilgrim returned to service after a brief maintenance outage. Hatch 2 closed for five days to perform maintenance on a valve in its steam supply system. Prairie Island 2 shut down for a refueling and maintenance outage, a two-month affair that includes replacing its steam generator. (Platts)
• Uranium spot prices rose slightly (50-90 cents per pound) last week, averaging $35.15/lb U3O8 (Ux Consulting) to $35.25/lb U3O8 (TradeTech). “While the spot price may have stalled since Friday, the forward price has continued to increase, thus reflecting a slightly steeper curve. The increase is less for year-end delivery, but for delivery for April 2014 and beyond, prices are notably higher than what were offered just a couple weeks ago. … During the recent WNA Symposium, a comment that we heard more than once was that we’ve seen the current market situation – depressed prices, cheap natural gas, and the like – before. And the observation that follows this is ‘we know what comes next,’ suggesting not only that prices will recover, but recover dramatically. … [T]oday, nuclear in the U.S. and elsewhere is not just impacted by natural gas but by subsidized renewables. By the same token, coal in the U.S. is being hit even harder than nuclear, but coal use in Europe is becoming more important with the shutdown of reactors there. This produces the interesting consequence of the U.S. exporting coal to Europe at the same time the U.S. is importing SWU from Europe. … [T]here is a widely-held recognition that much higher prices are needed to support future production, which we believe is the great value of publishing a long-term contract price. In this regard, the uranium market may be becoming more like the conversion market where the reported price dichotomy is accepted, if not welcomed.” (Ux Consulting’s Ux Weekly – September 23, 2013)