Posted: July 17, 2026, 12:23 pm

It’s a Warm One

As much as we’d love to bring out some load statistics and how warm the last week has been, in the spirit of summer Friday, we will just point anyone interested to the LMPs below. If you look, there are lots of triple digit averages for the DA On Peak markets. MISO and PJM saw some of the evening LMP prices into the $800-900/MWh. The coming week is supposed to bring some temperature relief and should also bring electricity prices back to seasonal levels.

PJM Capacity/FERC 22who?

There’s a saying attributed to Mark Twain, or Sam Clemens if you have a vibe with him that goes something like; ‘the rumors of my demise have been greatly exaggerated’. How about the a little word play and, “the rumors of my adoption have been greatly exaggerated.”. A fine quote from FERC Order 2222.

This week PJM released the results of its 2028/29 Base Residual Auction, or capacity auction. While this might be headline worthy, we’ve covered this topic at great length including how PJM got to a place where the participants pretty much knew the price going in. The price for all zones cleared at the expected mandated cap of $325/MW-day. PJM commented that supply was short again and had it not been for the cap, prices would have cleared around $555 for the zone.

One of the interesting things about this auction was the “historic” first opportunity for whole sale aggregators to participate in the capacity market through FERC Order 2222. Perhaps a quick reminder. FERC 2222 was introduced in 2020 with much fanfare as a way for small scale distributed energy resources (DERs) to participate in the wholesale electric markets which include the capacity market. The idea was to take a lot of small generation assets, aggregate them, and offer their generation and ancillary services into the market. Think a subdivision of rooftop solar aggregated into one asset. Anyway, as we said before, this was the first chance for DER aggregation to participate. These are exciting times, insert drum roll for desired drama and, nothing cleared in the auction because exactly ZERO resources were submitted to participate.

So what happened? Allowing small generation access to the wholesale market seems like a pretty good idea. Some readers may find this hard to believe, but there was a time not all that long ago, where placing a trade to buy or sell a stock required a phone call to something called a stockbroker, who then called the firm’s floor runner/trader, who then ran over to the specialist post to get the order filled and ran back to call the broker who called you back (much later) with your executed price. That sounds exhausting compared to your favorite trading app today allowing almost instantaneous trades. While not exactly an exact correlation, that is kind of the idea behind FERC 2222. The issue isn’t the idea, it’s the implementation.

When 2222 was announced it was with great excitement and hope. That hope started to fade as ISO working groups started tackling some of the implementation issues. If you’ve ever been through a corporate software upgrade, you’ve known real pain. Now take that times a large number considering all the utilities in the country running their own platforms that have to aggregate data through SCADA and present it to the ISO. While that sounds somewhat doable, we haven’t even touched billing, legal, and credit yet. The process has been much more complicated than was expected and will be very difficult to standardize. FERC 2222 might still be a good idea, but the roadside is littered with good ideas and bad execution.

If you have a little more faith than we do, you’re a true optimist. To show we aren’t playing the Grinch because we are old and crusty, we leave you with this from PJM regarding the peak load calculation for July 2.

Natural Gas Market Commentary

provided by

After breaking below its previous trading range last week, the natural gas market appears to have settled into a new, lower range. The front of the curve has traded mostly between $2.80 and $2.95 per MMBtu, while the upcoming winter strip has bounced between $3.50 and $3.60 per MMBtu, firmly in multi-year-low territory. It appeared yesterday that the market might be on the verge of another leg lower, but the dam ultimately held, and prices remained supported within those ranges.

Recent storage reports have been somewhat head-scratching for anyone who is not deep in the weeds of fundamental data. The week ended July 3 featured the hottest weather of the season to date, with elevated peak loads across nearly every ISO east of the Rockies and record temperatures in several key areas. That week produced a 61-Bcf storage build. The following week, temperatures cooled across the country, with population-weighted degree days taking a notable step back, yet the reported build fell to just 41 Bcf.

While a small portion of this disconnect can be attributed to reduced demand around the Fourth of July holiday, the primary driver appears to have been the sharp disparity in wind generation between the two weeks. Wind output normally suffers when temperatures reach extreme levels. In this case, however, wind generation was especially strong across the Midwest and Texas during the hotter week, putting a meaningful dent in natural gas demand from the power sector. During the week ended July 10, which was covered by yesterday’s storage report, wind output declined substantially. That increased reliance on gas-fired generators to meet cooling demand and contributed to the smaller storage build.

All of this is to say that renewable generation is having a profound impact on natural gas demand this summer, with record solar and battery output adding to the strong season for wind. Power-sector gas consumption has lagged 2024 and 2025 levels by a notable margin so far this season. Summer demand typically peaks over the next several weeks before normal temperatures crest and begin declining into the fall shoulder season. There is still time for demand to begin outperforming, but the results to date look bearish for market fundamentals and conducive to outsized storage growth during the back half of the summer.

Cocktail Corner

If your BBQ isn’t canceled because of the air quality this weekend, consider yourself lucky. Also, you’re welcome from those of us in the upper Midwest and Atlantic as you can lament us poor people being smoked out allowing for the riveting topic of smoke in the atmosphere. When Mother Nature throws something measurable at us, we need to brush up on the scale and number…Enhanced Fujita, Richter, Saffir-Simpson, Post-Shot Expected Goals, oh wait that’s something else. Well this week, it’s the Air Quality Index (AQI) and we’ll attach a little cheat sheet below. Just a heads up, we are attaching this not to be a conversation over a cocktail at the party, but just so you aren’t left out incase you were too into PSxGs this week.

Given the extreme heat this week, we got to wondering how much smoke and ash can hinder solar production. It seems obvious the answer is yes, but by how much. There are some interesting papers that talk about the fine particles which are labeled PM2.5 (add it to the list) and they scatter or absorb incoming sunlight. A lot of us spent the better part of two days in the maroon above 300 in the AQI, with a good chunk topping out at the index high of 500. With the index at that level, you can expect your solar production to be cut 40% to 60% according to Solar Analytics. On days like this week where smoke meets grid need, that can be meaningful.

By the way, if you run into a partygoer that doesn’t see how this is possible, look around for the nine year old kid, probably a boy, invite him over and have him explain dinosaur extinction to your antagonist. That tip deserves one final, you’re welcome.