One of the biggest impacts on Natural Gas prices is speculation by financial firms. This is the OTC market...Over the Counter transactions for natural gas futures contracts. Although futures exchanges place limits and accountability levels on trading today, they don't enforce them. Thus the CFTC is now looking at applying position limits consistently across all markets, equally...to include NG futures. This would, in theory, keep large funds from "pushing" the market.
PPL Territory (PA)
Caps come off January 2010. Metropolitan Edison, PECO (Philly) Energy, Pennsylvania Electric, and Allegheny Power remove then at the end of 2010. The PUC is estimating the prices in PPL for commercial customers to rise over 15% and 16% for industrial customers. In addition, they expect prices to rise significantly in all of the other markets (with the exception, currently, of PECO).
How active is the Illinois market?
According to a recent report by the Illinois Commerce Commission, only 24% of the small commercial customers have switched to a competitive retailer, 67% of medium commercial, and 90% of large commercial. This trend follows that of many other competitive markets, such as Texas.
New Jersey Market
New Jersey has seen a shift "down market" in terms of recent price increases to the standard rate commercial customer. For the first time, customers without IDR meters, now have an opportunity for significant savings in the PSE&G and JCPL territories. Estimates range from $.005/kWh to $.015/kWh.
Finally, electricity prices....
The assumption has been that demand support would return, NG would match oil in volatility, etc. This has not been the case and that doesn't appear to be changing any time soon. Many analyst don't expect demand pressure until late 4th quarter or early 1st quarter of 2010. Although rigs have shut-in, NG storage is at record levels and demand is week. Even this past week when the storage injection numbers came in below expectations, the price only bumped slightly and then dropped....and kept dropping. As I stated in previous blogs, NG should bump around at record lows for the next few months.
All the best and thanks for reading!