Transmission- Who Is Paying
Wednesday, Utility Dive hosted a virtual event titled Tackling Transmission. The event was broken into four sessions with us having particular interest in two, the ‘regulation’ and ‘get more out of existing transmission’ discussions. The get more out of transmission was a near repeat about what we wrote about a couple weeks ago and the unused capacity of transmission.
The regulation was a more interesting conversation as one of the panelists was former FERC Commissioner and Chair Mark Christie. We’ve always been a fan of, now professor, Christie because he tends to live in the real world of common sense. The discussion revolved around FERC 1920 which was adopted in the spring of 2024 and addresses a lot of who is going to pay for transmission, or in the words of FERC….”this rule adopts specific requirements addressing how transmission providers must conduct long-term planning for regional transmission facilities and determine how to pay for them, so needed transmission is built.”. In the discussion, Christie summed up the debate that’s been building over the years regarding who is going to pay for new transmission when he opined that going back to his PJM days, ratepayers were happy to pay for reliability but not public policy. Specifically, he mentioned those in places like Indiana having to pay or transmission for off short wind in New Jersey so that state can meet renewable mandates. As to be expected, there was some pushback from the rest of the panel so they agreed to move on to data centers.
The data center conversation was a little more nuanced as data center is viewed as new load and a potential addition to reliability (again, see utilization discussion). Readers of the WPO now this is a conversation that is just getting started and there will be plenty of back and forth coming.
EIA STEO!!!! Our Favorite
Nerd may or may not be the correct term, but we love the EIA monthly Short Term Energy Outlook (STEO). This report gives us an opportunity to geek out on a lot of new data and forecasts across the energy sector. As might be expected, this month’s report centered around the oil markets and updated forecasts from the Middle East disruptions.
Looking at the electricity data, there isn’t a lot that has changed. Residential use will again be the biggest driver of electric sales. Of interest is the second chart below where the forecast has upped commercial growth a touch higher. This is data center growth, and obviously has been on the radar, but once again the estimates are being edged up and growth trends continue. Not new news, but interesting to monitor the conviction of forecasts.
Natural Gas Market Commentary
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Natural gas prices pushed lower this week even as trading remained quiet in comparison to the rest of the energy complex. The benchmark NYMEX contract on Friday morning was treading water near $2.65 per MMBtu, which is the lowest pricing for prompt-month gas since last August. Meanwhile, the balance-of-summer (May–Oct) strip is testing the $3.00 level, sitting at its lowest point in more than four years.
The week’s biggest move came on Wednesday amid a sharp pullback in oil prices following the announcement of an apparent ceasefire in Iran. While this did very little to alter the fundamental landscape for U.S. natural gas, futures got swept up in the broader sentiment and have yet to recover. The reality is that there is not a whole lot in the immediate term to get bullish about. It is the shoulder season for the domestic market, and forecasted weather anomalies are limiting demand rather than promoting early cooling or late heating needs. Storage inventories are heading into the summer with a healthy cushion, and domestic production is near record levels.
However, there are some cracks beginning to form in the bearish facade. Even as domestic production sits comfortably above 110 Bcf per day, it has been a while since we’ve seen meaningful growth. With LNG exports full steam ahead above 20 Bcf per day and imports from Canada at historic lows, net supply is down compared to year-ago levels. Read another way, the volume of gas available to meet domestic demand and refill storage over the next seven months is lower than it was at this point in 2025. While the market doesn’t seem terribly concerned about this just yet, the contango in the curve is worth noting, with gas for Winter 2026–27 still near $4.00 and the January 2027 contract closer to $4.70 per MMBtu.
The market is effectively pricing in the need for stronger production growth to carry the system through injection season. If that growth fails to materialize, the balance tightens quickly—particularly in a hotter-than-normal summer scenario. That risk is partially reflected in the curve, but not fully. For end users, the takeaway is straightforward: near-term bearish conditions may persist, but the forward risk profile remains skewed to the upside, and complacency at current levels could prove costly.
Ode to an Icon
Before moving on to Cocktail Corner, we want to acknowledge that Wall St lost an icon this week. Murray Stahl’s name won’t be lumped in with Buffet, Munger, or Lynch, but it should be. Mr. Stahl helped create Horizon Kinetics and was a research and portfolio guy. Before HK, he spent many years at Bankers Trust as a senior portfolio manager and analyst responsible for a utility fund. Mr. Stahl was gracious with his time and did numerous round tables with shareholders lasting hours explaining in simple terms about his investments. Rarely were complicated financial terms or ratios thrown around, rather simple thesis….a lot like Berkshire and the old Fidelity Magellan Fund.
A few years back, I had the pleasure of dining with Murray and his assistant. The meal was the typical two hour meal with some food and drink. What was atypical was the conversation….the curiosity, the listening without judgement, and the ‘help me understand so we can figure this out together’ attitude were enlightening. After that, Murray’s round tables were must listen and will be sorely missed. There is a popular saying on Wall St for colleagues who have passed….closed for the final bell. In this case that doesn’t seem appropriate, because the lessons taught to numerous people doesn’t imply final bell. Instead, perhaps just a thank you Murray and Godspeed.
Cocktail Corner
Inflation has become a big talking point over the last five years. There’s been secondary education, healthcare, housing, and now electricity. Given load growth, and other factors, the narrative has been that electricity prices have been rising. This week a paper by the Brattle Group (two weeks in a row in the WPO) brought to us by the Lawrence Berkeley National Library, showed that electricity prices have been rising, but no more than other cost of living expenditures. In fact, looking at the two charts from below, we can see that electricity has increased in lock step with other categories, but has actually fallen relative to income. The paper walks through how some regions differ and it also dives into topics we’ve covered….capacity and transmission making up the price. An interesting read, and plenty of tib bits for the spring BBQ this weekend.
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DAY-AHEAD LMP PRICING & SELECT FUTURES
RTO ATC, PEAK, & OFF-PEAK CALENDAR STRIP
DAILY RTO LOAD PROFILES
COMMODITIES PRICING
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Well folks, it’s with some embarrassment that we must make a retraction, a WPO first. A few weeks back we offered RT’s famous banana bread recipe in Coop tradition. One of our long time readers, William, asked if we were going to run more recipes from our honorary ambassador of the month (RT)? As it turns out, RT sheepishly admitted it was his wife’s recipe and it might even be from the interweb and not family lore. Somewhat aghast, we asked if he had any original RT recipes he’d like to add as a make up. His response, “no, but I can grill a steak better than anyone”. When asked if there were any secrets, “it’s more of a science or skill, not a recipe. Sticking with the week’s theme, it’s like I could tell you how I bomb it off the tee 3 plus, but 100% if we play together, you’ll be first up hitting our second shots every time, even if you follow my instructions”.
We reached back out to William to deliver the news to which he chuckled and asked, ‘who is this RT guy?’. Obviously, he’s the WPO ambassador, but great question, who is this guy? RT first came to us like the great Viking warrior Ragnar emerging from a sea of concrete to join us on an outdoor patio for a cocktail many years ago, bringing with him his unmatched ISO knowledge. Since our first meeting, RT has amazed us over the years in many ways (rescued a drowning man, stopped a robbery, refurbished houses for the poor), but the question of ‘who is this guy’ resonated. While trying to confirm his banana bread recipe with his lovely wife, we asked that question….who is the RT we don’t know?
“Did you know RT drove a semi? Did you know RT was a Yin Yoga Master? Did you know RT spent some time at MIT?” started Mrs. RT. “Uh yes, no, and you’re kidding” was our response. Apparently our guy, the great Viking, was something of a prodigy in the world of STEM and earned himself in an early entrance to MIT. While there, the stresses of being a young genius took it’s tool physically. Because of the toll, RT found yoga as a mental and physical therapy for the stresses. As Mrs. RT put it, “his intense all in attitude was a curse and a gift”. RT went all in on yoga, quickly becoming a prodigy of another sort, so much so that he dropped out of MIT, moved to Mumbai, India to study at the world famous Yoga Institute, the oldest studio in the world. At this point, our mind was blown and we rattled off more and more questions to the point where Mrs. RT responded, “this is RT’s story to tell, perhaps he should tell it.”. Well said and we agree. Maybe a book conversation is in order?
Some final housekeeping. Since the WPO was off last week, we never got to our George Plimpton inspired April Fools piece. Again, if you haven’t, it’s worth reading. Look out for something further on this.