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California may face summer blackouts; Apex Power to build 1,100-MW plant in Ohio

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Insight Weekly: Labor market recovery hurdles; power market integration; nonbank M&A hunt

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ESG & Technology: Impacts and Implications

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Q&A: Q2'21 Power Forecast: Overheated Power Markets are Here – Who Wins, Who Loses, and Why?

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Essential Energy Insights - October 2021


California may face summer blackouts; Apex Power to build 1,100-MW plant in Ohio

Top news

Californiaelectricity customers could be in for two weeks of this summer with the AlisoCanyon gas storage facility still depleted and compromising reliable access togas supplies for power generation, according to an engineering analysisreleased April 5.

Aftertaking billions of dollars in charges to write down the value of its oil andgas subsidiary, the mining giant Freeport-McMoRan Inc. fired the top executives of the energy team April 5, afamiliar move for the company's largest shareholder, Carl Icahn.

Facinga disastrous industry downturn, Wyoming is heading into this November'selection with coal emerging as a pivotal campaign issue, with candidates onboth sides of the aisle bracing for and expecting further declines.

Power

*Apex Power Group LLC plansto build a 1,100-MW natural gas-fired power plant in Ohio. The GuernseyPower Station will consist of two gas-fired combustion turbine generators andone steam turbine generator. Subject to securing financing, the company expectsto begin construction on the project as early as spring 2018 and bring itonline by summer 2020.

*Nation-states are a growing threat to U.S. critical infrastructure and have theability to inflictmajor damage on systems including the electric power grid, the highest militaryofficial in charge of cyber security told a U.S. Senate committee.

*The province of Ontario plans to launch a request for qualifications processfor 930 MW of renewable energy from solar photovoltaic, wind, hydroelectric andbioenergy sources by Aug. 1, according to a newsrelease. The province will work with the Independent Electricity System Operator for the secondphase of the competitive large renewable procurement process.Separately, the provinceannounced a secondary offering for the saleof 72,434,800 shares of Hydro OneInc. at C$23.65 per share for gross proceeds of C$1.7 billion.

*The U.S. Department of the Interior has approved the 287-MW solar project onpublic lands in San Bernardino County, Calif., according to a newsrelease. The project would help to meet President Barack Obama administration'sClimate Action Plan goal of 20,000 MW of power derived from renewable energyprojects on public lands by 2020.

*NV Energy Inc. exceededits renewable energy requirements for 2015 and achieved a 21.2% renewablecredit level in southern Nevada and 31.3% level in northern Nevada, accordingto a company filing. The 2015 legislated requirement is 20% based on totalenergy sales. The BerkshireHathaway Energy subsidiary also is reviewing bids to 35 MW of nameplaterenewable capacity and to secure a long-term agreement for a minimum of 100 MWof additional renewable energy in Nevada.

*Morgan Stanley Research North America resumed coverage of at"equal-weight," noting that the now-completed acquisition of provided"meaningful accretion" and increased exposure to regulated cashflows. However, the brokerage's compound annual growth rate estimate for Exelonis at the lower end of the management's 3% to 5% target for 2015 to 2018 due todepressed gas and power forwards at Exelon Generation Co. LLC.

* Goldberg Law PC,Holzer &Holzer LLC, Levi& Korsinsky LLP and BernsteinLiebhard LLP have filed class-action lawsuits against on behalf ofinvestors who purchased or otherwise acquired shares between May 7, 2015, andMarch 15, 2016. The complaints allege that TerraForm made false and misleadingstatements during the period about its management services agreement withSunEdison Inc.

* ProjectResources Corp. is proposing to build a 300-MW wind project inNobles and Murray counties, Minn., the StarTribune in Minneapolis reports. The project, dubbed Nobles 2 PowerPartners, is expected to go online in 2018.

* Former NRGEnergy Inc. CEO David Crane believes that the renewable energyyieldco model is "completely broken" and that some yieldcos may go inthe hands of private equity and infrastructure funds, BloombergNews reports. "Yieldcos have to be remade," Crane was quoted assaying. "I'm actually surprised that there are more yieldcos that haven'tbeen taken private."

* Consumer advocacy group Alliance for Affordable Energy is urgingcredit rating agencies to review the details of the recently approved sale ofCleco Corp.subsidiary Cleco PowerLLC. "Several deal points that will likely increase risk toLouisiana ratepayers were made during the special meeting, an unusual move thatdid not allow for proper review by the [Louisiana Public Service Commission]staff or the public," the group said.

* The Michigan Department of Environmental Quality has rejectedproposed changes to air pollution permit rules that would limit the number oftoxic chemicals regulated by the state.

Natural gas/midstream

*Oil and natural gas producer LINNEnergy LLC reached a settlement agreement with certain holders of its $1.0billion outstanding senior secured second-lien notes, a move that clears theway for the company to begin a potential restructuring of its debt, including apotential restructuring under a Chapter 11 plan of reorganization. Under thesettlement, the company said it has delivered the mortgages associated with thenotes and is no longer in default.

*The U.S. Department of Justice is preparing to sue to stop the of the oil-field service firmsHalliburton Co. andBaker Hughes Inc.,according to April 5 reports by Bloomberg and Reuters.

* said it has completedthe sale of oil and natural gas assets marketed by its subsidiary. Fidelity's offices, headquartered in Denver, areexpected to be close by mid-2016. "Exiting the E&P business lowers ourrisk profile, and it allows us to focus more on growing our other business operations,"said David Goodin, president and CEO of MDU Resources.

Coal

*Fitch Ratings expectsthat the rules for self-bonding will tighten and the practice of allowingself-bonding "will eventually become a rarity" given a record numberof financial defaults in the U.S. coal sector.

*Mining interests and the nation's leading coal producer this week fired backagainst environmental groups suing over federal coal leases, claiming that thegroups cannot proveinjury from alleged failure by the government to consider climate-changeimpacts in approving the leases.

*World Resources Institute foundthat 21 countries, including the U.S., have managed to reduce global greenhouse gas emissionswhile their GDP continued to grow. The research found that the implementationof Clean Power Plan is expected to reduce total U.S. energy-related CO2emissions by a further 6% between 2020 and 2025 with its GDP increasing by 13%in real terms over the same period.

Commodities

*The movement inunderlying fuel prices pointstoward generators favoring natural gas over coal through the firstquarter of the year.

*After retreating by 4.4 cents in the prior session to a close at $1.954/MMBtu,May natural gas futures continuedlower overnight ahead of the Wednesday, April 6, open, as tradersconsider signs of breakdown in the recent weather support alongsideexpectations for inventories to end the titular withdrawal season at a freshrecord high.

*Next-day power markets could see mostly lower moves during the Wednesday, April 6,session, as traders look to softer demand outlooks across the country andweakness for natural gas prices.

*During the firstquarter of the year, more than 366 million allowances and offsets were held incompliance accounts of covered entities in California and Quebec, according toquarterly data posted April 5 by the California Air Resources Board. Thiscompares to about 300 million allowances and offsets held in such accountsduring the fourth quarter of 2015.

New from RRA

*NSTAR Electric, asubsidiary of EversourceEnergy, has outperformed many of the other utilities included inRRA's Quality Measures Subsidiaries multi-year study, in regard to severalmeasures.

*While rate case activity was relatively modest in March 2016, there was asignificant amount ofnon-rate case activity particularly with respect to mergers.

Quoted

"Oneof the biggest issues that we had from an investor perspective was therenewable side, even though we were the first or second largest solar companyin the United States at the time, it never mattered to investors at all … itjust made the investment proposition more complex," former NRG EnergyPresident and CEO David Crane said.

The day ahead

*The U.S. Senate Environment and Public Works Committee will holda hearing at 10 a.m. ET, "Oversight Hearing: The President's FY 2017Budget Request for the Nuclear Regulatory Commission." The purpose of thehearing is to examine President Obama's budget request for the U.S. NRC.

*Former Massey Energy CEO Don Blankenship to be sentenced for a misdemeanor atthe U.S. District Court for the Southern District of West Virginia? inconnection with an investigation into the Upper Big Branch disaster of 2010.

*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.