PJM Transmission

When it comes to electricity markets, we've covered a lot of topics over the years, but safe to say most of our conversations have been centered around the big three of energy prices, capacity markets, and transmission. Of the three, transmission probably gets the fewest keystrokes, and if we're being honest, it's because it isn't in our wheelhouse and it's kind of hard. Energy and capacity seem to have a market component to them while transmission requires a combination of legal scholar, electrical engineer, and political science understanding. Because we are none of those, we tend to default to the talking point, 'we need more transmission' and then include some statistics about the grid to prove the point.

To be fair, we have covered a decent amount of transmission planning and building within MISO, specifically the tranche 1 and 2 of their plans. Late last year, PJM reviewed projects within their 2025 Regional Transmission Expansion Plan Window 1. Last week the board approved projects worth $11.8 billion as part of the plan. To put some context to the number, we are including a chart from a 2023 report from the Consumer Advocates of the PJM States, reporting on a transmission update. While it takes some assumptions to parse out the most recent data, spending was up last year and probably mirrored the latest plan. With that, looking at the chart below, PJM is looking to catch up to MISO and their over $34 billion in commitments for projects going forward.

As expected with almost any of these projects, of course there is some push back as members will have to pay. According to Utility Dive, one such group is the Pennsylvania Office of Consumer Advocate arguing that one of the projects costs too much and alternatives should be considered. Add consumer advocate to the list of legal scholar, electrical engineer, and political science.

Natural Gas Market Commentary

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The historic Nor’easter that dumped up to 3 feet of snow on parts of New England wasn’t enough to shake natural gas futures back into volatility. The brief spike in heating demand was little more than a blip on the radar and will likely lead to just one slightly elevated storage draw. Meanwhile, the eyes of the market are firmly on the upcoming spring, which is currently forecast to bring exceptionally mild weather across virtually the entire country.

Wednesday saw the March 2026 contract expire with a whimper at $2.969 per MMBtu. That was the lowest NYMEX expiration price since October 2025 and closed the book on the Winter 2025/26 strip at an average price of $4.583 per MMBtu. That winter strip price represents nearly a 45% increase over the previous season. It is the highest since 2021–22 and the second-highest winter settlement since 2010. Of course, that average was skewed considerably by the February contract, which expired near $7.50 amid a period of panic and uncertainty when there was no end in sight to the January cold snap.

Thursday’s storage report showed a draw of just 52 Bcf from U.S. inventories. I use the word “just” because it was one of the lightest February withdrawals on record and the lightest since February 2017, which included a week that posted a net build into storage. The data stood in stark contrast to the five-year average draw of more than 150 Bcf and the year-ago pull of over 250 Bcf, drastically improving the storage position relative to both benchmarks. It is a clear illustration of how one very mild week can undo some of the impact of a historically cold stretch.

With storage inventories now on par with the five-year average and back to a healthy surplus versus year-ago levels, it would take a massive shift in temperature forecasts—or some other external catalyst—to bring bullish sentiment back into the marketplace anytime soon.

Coffee Corner

It's that time again, quarterly earnings time on Wall St. The WPO is starting to blur the lines between cute little blog about the world of electricity and some bulge bracket firm on Wall St trying to decipher earnings numbers, especially in the world of semiconductors. Unlike the years of old, semi conductor used to be synonymous with Intel, not anymore, it's Nvidia.

For those not paying attention, we care about Nvidia because they drive data centers and data centers have been driving electricity conversation for the past year. Wednesday evening Nvidia released their Q4 2025 and full year numbers. While we care about the overall picture, for this publication data center is all that matters. The company wrapped up the quarter with a record $68.13B ($63 being the data center segment) in revenue and finished the year with $194B in data center revenue. The company then went on to guide Q1 revenue at about $78B. When a "B" replaces nine zeros, it gets hard to comprehend, so here's a little thought....

....what if Starbucks did that revenue in a quarter? Starbucks has 40,000 stores and does roughly 60% of it's business in the first five hours of the day. If you did the math using the 60% of $78B for the quarter and a $10 customer ticket (we know, we've been to Starbucks plenty and realize that might be really light), at any given moment in the first five hours of the day at any Starbucks store around the world and if you're at the end of the line, you'd be roughly number 250th inline for your favorite shot of joe, which frankly, feels about right some mornings. Thank goodness for all the folks using the order ahead app on their smart phones cutting the line a bit. Interestingly, the smart phone app brings us back to Nvidia...actually that's more Taiwan Semiconductor, but you get the point.

Oh, by the way, analysts on Wall St expect Nvidia to account for 50% of the $700B expected spend by the top hyperscalers for the year. For some context, that's the amount Congress authorized under TARP a few years back.