Summer Starts, and It’s Going to Be OK

This week NERC released their final reliability assessment of the US and Canada grid for the summer season.  While not 100% all clear, it does look a touch better than it has in the past as there were no High risk levels in the seasonal assessment.  Below shows the assessment from last year on the left and 2026 on the right.  As seen, the risk moved from the middle of the country (SPP, MISO, and ERCOT) out west to WECC with the same threat to MRO-Sask and ISO-NE.

The report is very detailed, and we’ve included a link for some fun summer beach reading on the unofficial kick off to summer weekend.  To summarize in the very broadest terms, some of the risk migration from the middle of the country year over year is load growth not coming on as quickly as expected and what did was met by generation, and also weather patterns setting up with warmer weather away from the center of the US.

Again, we aren’t going to do a deep dive book report, but we did chuckle at this recommendation….

Engage state or provincial regulators and policymakers to prepare for efficient
implementation of demand-side management mechanisms called for in operating
plans

reading this literally paints the picture of the master coordinator calling politicians to help.  Good Luck.

Natural Gas Market Commentary

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The first significant heat wave of the season helped drum up bullish sentiment across the natural gas futures market early this week, but prices are now working on a third straight day of declines, giving back the previous gains ahead of the holiday weekend. The heat peaked in the populous East on Monday and Tuesday, leading to estimated power burn of nearly 40 Bcf per day. This marks a new high-water mark for this early in the cooling season and could be an indication of outsized demand during periods of major heat in the coming months. However, with the event followed by exceptionally mild weather across most of the country, demand has fallen back quickly, dragging market sentiment lower along with it.

With the June 2026 NYMEX contract set to expire next Wednesday, prices at the front of the curve hit a weekly high near $3.14 per MMBtu before reversing lower on Wednesday and breaking back below $3.00 support as of Friday morning. The remainder of the summer strip has followed a similar pattern, even as the upcoming Winter 2026-27 strip has struggled to get off the mat. Winter gas showed signs of life on Monday and Tuesday but reversed those gains and then some, pushing toward fresh four-year lows south of $3.80 per MMBtu.

The market remains mostly complacent amid relatively stout storage growth and mostly run-of-the-mill heat in the two-week forecast. With LNG export demand being impacted by seasonal maintenance, the balance looks loose in the near term. However, as discussed previously in this space, the lack of significant production growth and the recent demonstrations of strong power generation demand on a weather-adjusted basis should help keep the market supported, with underlying risk still building as peak summer approaches.

Investment Bankers Gotta Eat Too

Monday morning brought the news of a “mega-merger” in the world of electric utilities when a proposed merger between NextEra Energy and Dominion Energy was announced.   The deal would have NextEra paying roughly $67 billion for Dominion.  As an aside, we used air quotes for mega-merger because ten companies reported quarterly revenue numbers above $67 billion in Q12026, with Amazon at $181B, but we digress.

We aren’t going to dive into the details because this deal might be a 2028 story.  By the time shareholder, FERC, NERC, state commissions, and what will surely be lines of advocate group lawsuits all weigh in, this probably has a long road ahead.  That said, it is interesting to imagine what might be next.  Mergers within the utility world certainly aren’t an every day occurrence, but calling them rare might not be accurate either.  It seems like at least once a year, usually more, we see these types of deals floated or announced amongst some of the biggest players in an industry.  In fact, we aren’t more than two months removed from the American and United Airlines merger discussions/rumors.  Again, we aren’t going to spend a lot of time breaking down which assets go where or what it means for this or that given the hurdles ahead, but we are very interested to see if this sparks other merger discussions especially in deals that might be easier regulatory hurdle clears.  This could get interesting as investment bankers probably spent half the week freaking out over a possible Long Island railroad strike making the Hamptons commute harder, and the other half thinking about what utilities they could slap together.

By the way, on another note, when you hear of college football coaches bolting for the next gig which includes the giant buyout paid to the spurned school, the whole process might have come from Wall Street.  For instance, should the Dominion board entertain a rival bid and go with someone other than NextEra, it will cost them a cool $2.25 billion in break up fee.

Note

With the unofficial start of summer, brings the official start of vacation season.  WPO will be off the next two weeks with staff vacations.  If there is overwhelming demand, we will do an abbreviated version the first week in June.

NOAA WEATHER FORECAST

DAY-AHEAD LMP PRICING & SELECT FUTURES

RTO ATC, PEAK, & OFF-PEAK CALENDAR STRIP

DAILY RTO LOAD PROFILES

COMMODITIES PRICING

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RIP Piglet, we barely knew you.  This weekend, while we toast those in memorial, we will wish our friend Piglet Godspeed.  May the next chapter be filled with warm updrafts and overly visible wind mills.