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Texas IPP shares fall after EPA haze rule stay; FirstEnergy to abandon 856-MW coal capacity

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


Texas IPP shares fall after EPA haze rule stay; FirstEnergy to abandon 856-MW coal capacity

Top news

Therecent court decision to stay implementation of the U.S. EPA's federal hazerule in Texas could delay the plant retirements many generators in theElectric Reliability Council ofTexas Inc. market have been betting on to increase power prices. OnJuly 15, the U.S. Court of Appeals for the 5th Circuit implementation of the EPA'sregional haze rule in Texas, criticizing the agency for delay and failing toconsider the rule's impact on grid reliability.

MostAppalachian shale producers are expected to report losses when they releasetheir second-quarter earnings, but three drillers in particular are bestpositioned to come out in the black, analysts said. Analysts will be especiallycurious whether drillers in the Marcellus and Utica shales continue to holdproduction volumes flat while repairing balance sheets by spending less capital.

Withelection season in full swing, June reporting on political contributions showedMurray Energy Corp.'spolitical action committee making good on pledged support for Donald Trump,while Alpha Natural ResourcesInc. closed up shop on its own PAC. According to the U.S. FederalElection Commission, or FEC, the Murray Energy PAC donated $100,000 to TrumpVictory, a PAC working on behalf of the Republican Party's nominee forpresident.

Power

* Inresponse to challenging market conditions, FirstEnergy Corp. plans to sell or deactivate the 136-MWBay Shore unit 1 in Oregon, Ohio, by October 2020, and retire units 1-4 of itsseven-unit W.H. Sammis Plant in Stratton, Ohio, in May 2020. Units 1-4collectively represent 720 MW of capacity, the company said in a .

*The Utah Court of Appeals dealt a blow to efforts by environmental groups to block fromsecuring water rights for a potential 3,000-MW nuclear plant near Green River,Utah, TheSalt Lake Tribune reports. The court upheld a ruling by the 7thJudicial District Court in Emery County, Utah, that the developer's "would not overlytax the river by diverting water to cool a pair of nuclear reactors."

*After receiving plenty of critical feedback on an initial informationcollection proposal, FERC on July 21 revisedits planned approach for ensuring that it has enough information toadequately oversee wholesale power markets. Instead of issuing a new rulerequiring market operators to report the entities "connected" withtheir market participants and a separate new rule revising the ownershipinformation that entities with market-based rates must submit, FERC abandonedtwo previous rulemakings and issued a whole new one streamlining and combiningthose two efforts.

* TheWall Street Journal carries a report on the resurgence of interest inthe century-old pumped storage technology, which not only allows producers tostore electricity on a larger scale, but also helps them meet emissionsreduction targets.

*El Paso Electric Co.has agreed to cut its annual nonfuel base rate hike request to $37 million witha return on equity of 9.7% as part of a settlementagreement it filed with Texas regulators. The settlement would resolve thecompany's pendingrate case, including the revenue requirement for the power plant. El PasoElectric had originally sought an approximately $71.5 million increase inrevenues in August 2015. Earlier this year, the company modified the requestedincrease to $63.3 million.

*Talen Energy Corp.has confirmed that it will reduce its workforce at its three power plants andAllentown, Pa., headquarters by 131 workers, TheMorning Call of Allentown reports. Talen will cut 53 "excesspositions" at the Susquehanna nuclear plant, 42 at the Brunner Islandcoal-fired facility, 29 at the Montour coal-fired plant, and seven at itsheadquarters.

Natural gas/midstream

* Anew report from a dozen environmental groups concludes that 19 proposedpipeline projects in the U.S. pose a threat to the country's climate changegoal of reducing greenhouse gas emissions 83% from 2005 levels by 2050, Reutersreports. While the pipelines would help unlock at least 15.2 Bcf/d of new gasproduction, a projected rise in natural gas consumption "would alone leadto emissions that would surpass the current long-term U.S. climate target by2040," according to the report.

*Riverstone HoldingsLLC is assigning its right to acquire an approximately 89% stake inCentennial Resource Production LLC to Silver Run Acquisition Corp. in exchangefor acquiring an estimated $810 million worth of Silver Run class A shares,including up to $175 million from Riverstone Energy Ltd., according to a news release.At closing, Riverstone and its affiliates will own an approximately 51% stakein Silver Run. In addition, Silver Run is selling $200 million worth of stockto certain funds managed by Capital World Investors and by Fidelity Management andResearch Co.

*The U.S. Bureau of Land Management has proposed a planfor oil and natural gas drilling in and around Moab, Utah. The Moab masterleasing plan covers nearly 785,000 acres of public lands in Utah's Grand andSan Juan counties. "The proposed plan takes a landscape-level approach tobalancing the protection of the iconic scenery in and around Moab and access tothe rich energy resources found there," Interior Secretary Sally Jewellsaid in a statement.

*After a historic drop from March to April, production in North Dakota wasessentially flat throughMay. A more recent reading was positive for future production, withthe state's rig count at July 21 improved from June. Gas production in May madea move upward, to 50.9 Bcf, or 1.64 Bcf/d, on a preliminary basis, according tothe monthly report from the North Dakota Industrial Commission.

* has agreedto acquire InterOilCorp. for more than $2.5 billion. The transaction will give ExxonMobil access to InterOil's resource base, including interests in six licensesin Papua New Guinea, the company said in a statement.

*ConocoPhillips Co.has confirmed that it will cut another 1,000 jobs this year, primarily at itsTexas and Calgary, Alberta, operations, TheWall Street Journal reports. The planned 6% workforce reduction is in additionto 3,400 job cuts that the U.S. shale producer has made since September 2014 inresponse to the downturn.

Coal

*Coal ash from thelargest units at the Colstrip power plant in Montana must be stored differentlyin the future, according to anagreement reached between the plant's owners and environmentaladvocates. The agreement, filed July 21 with Montana State District Court inRosebud County, calls for an end to coal ash waste being disposed of as wet sludgedumped into waste impoundments.

*Total U.S. coal rail deliveries for the week ended July 16 year over year to 84,272carloads, but showed a sharp improvement from the previous week, according todata from the Association of American Railroads. Year-to-date coal raildeliveries are down 29.7% compared to shipments in the year-ago week, aconsistent downward slope pointing to the potential largest U.S. annual coalproduction decline on record.

*Ameren Corp.subsidiary Ameren Missouri has agreed to establish a $2 million fund forenvironmentally beneficial projects as part of a settlementagreement with the Sierra Club. The settlement resolves legal action takenby the Sierra Club in 2014 to address the company's nearly 8,000 allegedviolations at the Labadie, Meramec and Rush Island coal-fired power plantsbetween 2009 and 2013. Ameren Missouri is known legally as

Commodities

*The slowdown in naturalgas production growth and the decline in oil output may be nearing an end, asthe rise in prices since a bottom was formed earlier this year has led to signsthat some producers may be willing to ramp up output in the second half of the year.

*After ending the prior session up 3.4 cents at $2.692/MMBtu, August natural gasfutures initially recoiled overnight ahead of the Friday, July 22, open, butturned positivelater, as traders consider ongoing weekly storage builds that remain belowaverages but that continue to drive inventories closer to what is expected tobe a record-high level ahead of winter, with the contract last seen 1.5 centshigher at $2.707/MMBtu.

*Mirroring a mixed session on Thursday, power prices at the daily markets couldpost varied moves inthe week's closing session Friday, July 22, as traders look to variedpost-weekend demand outlooks and recent volatility at the natural gas futurescomplex. At last glance, August natural gas was trading 1.6 cents higher at$2.708/MMBtu, extending the 3.4 cents added in the previous session.

Quoted

"Nowthat Tesla is ready to scale Powerwall and SolarCity is ready to provide highlydifferentiated solar, the time has come to bring them together," TeslaMotors Chairman and CEO Elon Musk said outlining a revised strategy for Tesla'sacquisition of SolarCity.

The day ahead

*Early morning futures indicators pointed to a higher opening for the U.S.equity markets. To view more SNL equity market indexes, click here.To view more SNL Energy commodities prices, click here.