Just got this from ICE

Physical Gas Traders
CHANGES TO MAX PRICE FOR U.S. PHYSICAL GAS
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I can't see cash prices but I can see financial ones. I can tell you that Bal Month (Which is Feb 17-28) HSC has traded about 0.75M MMBtu (so like 75 NYMEX equivalent) at a VWAP of just under $100 which is up from $32 on Friday. Thats the highest price I see but smaller locations (like the ones I referenced trading nearly $400 don't trade like this). Waha which is west Texas, and one of the locations that traded negative a few months back has VWAP around $75 for Bal Month. For reference Bal Month Henry Hub has traded about 350 contracts at a VWAP of $6ish which is obviously considerably lower.

SMCJB 

Just FYI, not sure if people know but cash prices went crazy for this weekend with the highest being for gas in Oklahoma at $391 (Enable), $375 (ONEOK). Yes that's nearly $400/MMBtu 100x times what they were a week ago.

Cash trades today, for delivery Wed 17th include ONEOK trading $999 and HSC trading $400!

And just FYI this is the ERCOT (Texas Power Gird) clearing price here in Texas at 10PM, with 40+% of Texas homes (and 55% of Houston homes) without power... ($9000 is the cap, but make sure you read the 'adders'!. I believe this means ERCOT power is trading about $17000 when it normally costs $35!)



I'm currently without power for 17 hours now, but have a generator. TV and primary internet is out but we have a backup connection which is still up. Unfortunately have one broken pipe already so water in house is now off. Still this puts me in a good position versus many others.

SMCJB 

Cash trades today, for delivery Wed 17th include ONEOK trading $999 and HSC trading $400! And just FYI this is the ERCOT (Texas Power Gird) clearing price here in Texas at 10PM, with 40+% of Texas homes (and 55% of Houston homes) without power... ($9000 is the cap, but make sure you read the 'adders'!. I believe this means ERCOT power is trading about $17000 when it normally costs $35!) I'm currently without power for 17 hours now, but have a generator. TV and primary internet is out but we have a backup connection which is still up. Unfortunately have one broken pipe already so water in house is now off. Still this puts me in a good position versus many others.

It looks like investment in infrastructure companies currently is a good idea. On the one hand, Mr. Biden intends to start a huge package to finance improvements of infrastructure, on the other hand there seems to be significant need for improvement of the US infrastructure.

There is no news on how long the power outage will last. I assume until the freeze ends. Communication has been virtually non-existent from the Utility/Transmission Company (Centerpoint) or from the Grid operator (ERCOT). Local officials are very quick to point out that this is nothing to do with them and state officials being political and blaming the shift to green energy. While wind and solar do have the unfortunate effect of making the grid less stable, right now we have 4000 MW of wind offline and 20000MW of gas offline, so I think its unfair (and very political) to make the statements they are. Texas has added massive wind generation in the last decade and decommissioned other fuel types. The problem is the wind plants are all out on the plains, hundreds of miles away from the big load centers. (Austin, Dallas & Houston). At times this wind sells for negative prices but they don't care because of the government subsidies they get. Unfortunately this destabilizes the grid as wind and solar are both non-responsive. They are either on or off. No load balancing or anything like that. So it will be interesting to see what a Biden Infrastructure bill means for Texas Power. Texas is a Republican run state and they are already blaming green power solutions for the current problem. I doubt they will be open armed to make it even greener, with or without government subsidies.

Can't we just go back to nuclear? Cleanest energy around...

Sorry about the mess you're in down there, @SMCJB, hope things get back online quickly!

Back when I lived in the Northeastern US I lost power usually once or twice a year, often for several hours but rarely more than a day. Since I moved to Germany nearly 8 years ago I haven't lost power once. Underground cables apparently withstand wind and ice storms a bit better than aboveground powerlines. Who knew?

As an aside, I'm in the midst of reading about Arnold, Hunter et al in the Hedge Hogs book you recommended. Very interesting so far, but the author certainly makes no apologies for her anti-speculative biases

I just read another WSJ article about this situation and it was pointed out that a lot of the shutdowns were due to the fact that pipes and waterpumps froze, and that many of the natural gas wells and pipelines had to shut down because of this. What I find amazing is that the power plants apparently don't maintain any fuel reserves, or have any kind of backup plan or preventative / protective policies in place whatsoever, simply because they're cheap bastards who claim that customers insist on the lowest electricity prices possible, and wouldn't tolerate any price increases. Is this accurate? It strikes me as incredibly short-sighted. No wonder gas prices are so volatile.

For comparative purposes, I pay roughly €0.25-€0.30/kwh here, so almost triple the price of electricity in Houston, which apparently costs around $0.10/kwh(?) Back in my old home state (northeastern US) its a little over $0.20/kwh.

Retail price for electricity in Houston has fluctuated over the last several years from 8.5c to 14c/kw but mostly in the lower end of that range. (My current 36 month contract is about 8.6c/kwh which is the lowest I have ever had). That is the all-in delivered rate. Some of that goes to my electricity provider (who I can choose) and some of that goes to the wires/transmission company (who I can NOT choose - there is only one per area). Since the wires/transmission is a legal monopoly the transmission/delivery charge is set by regulators and currently is $4.39/month + 3.744c/kw so for 1000kw/month that's approximately 4.2c/kw. Hence the actual energy charge, which is the balance of the bill, has fluctuated between say 4c and 10c/kw.

I agree that it seems like the major causes of this outage were a) Natural Gas Pipelines freezing in West Texas so there wasn't the gas available for gas plants and b) meters/valves/turbines freezing at power plants which knocked all energy types (even one nuclear plant) off the grid. Regarding on-site storage, that's only really possible with nuclear, coal and hydro. Given that Texas is predominantly Wind and Natural Gas there's probably very little on site storage.

Having grown up in England, where everything is underground (at least in Urban areas) I also find the proliferation of transmission poles with power, cable and telephone wires not only very unsightly but also a core weakness of the system. Probably a cost thing!

Currently in Houston 98.3% of people have power, with approximately 37k homes without it. Huge change from the 40% and 1.4M numbers earlier in the week. Big problem now is that virtually nobody has water since most of the water utilities do not have enough pressure to deliver water.

SMCJB 

Having grown up in England, where everything is underground (at least in Urban areas) I also find the proliferation of transmission poles with power, cable and telephone wires not only very unsightly but also a core weakness of the system. Probably a cost thing!

Cost is definitely part of it - undergrounding requires an upfront investment that must be recouped somehow - but another big factor is the linemen and the unions who want to protect their jobs.

Still, for safety and grid security concerns it really makes sense, at least in densely populated areas, to bury those powerlines. California, in particular, should be all over this.

MRCI suggests entering the NGX-NGK and the NGZ-NGM spreads in the second half of February or first half of March, respectively.

There is a good relation between "Best Equity Amount" and "Worst Equity Amount".

The trade worked in 14 of the most recent 15 years.

The spread is not far above its multi-year lows.

This year, I enter a little early, trying to use the current high price of Natural Gas as a consequence of the cold weather as an entry point.

My (conservative) target is around the highs in December / January.

Best regards, Myrrdin

There isn't a "power trading' thread, so just going to post this here. ERCOTs initial presentation of last weeks blackouts is out, and its interesting, or at least was to me. Can't find a link to the actual presentation, just this copy that is on google docs.

https://drive.google.com/file/d/1k8CkN0Se3Oo_CJs6lG5WK5Q-DHkxt-DB/view