Posted: February 6, 2026, 12:34 pm

Another State- ISO Feud…Maybe

We’ve mentioned a feud or two between states and ISO’s in the past. The most visible or vocal, has been the state of Pennsylvania and PJM regarding capacity pricing. We’ve also touched on some of the western states and their issue with the MISO’s long term planning on transmission and their feelings on paying a disproportionate amount.

This week we can add ISO-NE as The New Hampshire Department of Energy’s Executive Council approved a study on a bill passed earlier in the House that would look into the feasibility for withdrawal from the ISO. A move from IS0-NE isn’t a given, and as one of the authors of the bill allowing the study made the point that it’s a “great learning experience”. The genesis of the bill is to study if New Hampshire ratepayers are paying for other ISO-NE member state renewable policies. Technically, the state could not withdraw as the state’s utilities and transmission owners are the members, but they may be able to direct such moves.

Reading some of the opinions and comments on this, it seems ultimately New Hampshire members of the ISO will continue to be so, but it further highlights how ISOs are coming under pressure from states as they perceive costs to be unfairly allocated.

Natural Gas Market Commentary

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With an end to the cold in sight and forecasters calling for a mild second half of February, the natural gas market is finally returning to something resembling “normal.” A week ago, the March 2026 NYMEX contract was screaming to new highs as traders braced for what might show up in the weekend model runs. Instead, those runs not only failed to extend the intense cold, but began converging on a major pattern flip beyond the upcoming weekend.

Fears of a historically cold February — and additional major cold events — have eased, at least for now. The market opened sharply lower on Sunday, with March ultimately giving up more than $1 per MMBtu during Monday’s trading session. Prices have staged a modest recovery since and are working on a fourth straight day of gains, though that rebound looks minuscule in the context of the extreme volatility seen during the second half of January.

With the dust settling from the cold (though frigid conditions will linger over the Northeast for the next few days), attention has turned toward assessing the fundamental impact of the event. The clearest signal came in yesterday’s EIA storage report, which showed a record-breaking 360-Bcf draw for the week ended January 30. Ironically, despite being the largest weekly withdrawal on record, the data landed with a thud. Analyst expectations had stretched as high as 410 Bcf, leaving the actual draw on the bearish end of the forecast range.

To be fair, the market begins to run into real physical constraints during extreme conditions, meaning actual demand cannot reach the levels implied by temperature-based models. As a result, yesterday’s report serves as a useful proxy for a “maximum storage draw” under current infrastructure.

After next week’s report, the full impact of the cold snap will be reflected in storage data. The smart money is on the three-week period from January 17 through February 6 marking the largest aggregate storage draw of all time. So far, withdrawals total 602 Bcf across the past two reports. With another draw above 250 Bcf likely next week, the market should easily surpass the previous three-week record of 820 Bcf set in January 2018.

From there, it becomes a matter of running out the clock on winter without a return of major cold. Assuming the market avoids any additional Arctic blasts (knock on wood), inventories should exit the season in decent shape. Ultra-bearish end-of-season projections north of 2.1 Tcf are firmly off the table, but stocks could still land near 1.7–1.8 Tcf — roughly in line with both the five-year average and year-ago levels. That should be enough to keep sentiment in check, though plenty of caution is still warranted with a meaningful chunk of winter remaining.

More Datacenter

As we pointed out last week, Wall St is in Q4 earnings season. We did a little dive into Microsoft as their stock plunged after analyst questioned the bloated capex. Frankly the slide hasn’t stopped (chart included) and there’s been a little contagion of angst in the software world. It appears investors may be getting serious about ROI when it comes to data centers and compute power. We focus on Microsoft as it’s one of the big hyper-scalers, but also because they have a big footprint in the Midwest, specifically Wisconsin and Wisconsin Energy (WEC). MSFT did not shy away from committing to full steam ahead on spend, but at some point, you do have to return the phone call from the biggest shareholders.

WEC released 25Q4 numbers yesterday. We usually look past the earnings and do a quick skim for the spend and growth numbers and both popped our eyes a bit. WEC announced that their five-year capital plan is now up to $37.5 B which includes an additional $1B specifically tied to MSFT’s expanded data center plans. Part of their plan includes $12.6B tied to new renewable generation and another $7.4B for combustion turbines and RICE units. The reason for all this spending is the forecasted growth of 3.9 GW in the next five years, with most of it north of Milwaukee and south along the I-94 corridor The 3.9 GW projects to roughly 6% growth over the next five years….and drum roll please- data centers being the driver.

If the Wall St continues to hold the big datacenter players to some more reasoned spending, it will be interesting to see the trickle down to WEC and other utilities. If you recall, our comments about MSFT last week, were embedded in some concerns about debt utilities are taking on to meet the new demand driven by compute power. if you’re scoring at home, WEC announced $4B-$5B in 2026.

Cocktail Corner

Ok folks, after a dry January, Cocktail Corner is back (for now) by request. If you are new here, this started back in the fall as we were heading into the holiday season. It was designed to arm the reader with some tidbits for party conversations.

Last week we featured some screenshots of generation mix by ISOs during the height of Winter Storm Fern. Some folks were surprised, and shocked, to see fuel oil is still being used in large amounts to generate electricity. Long time readers of the WPO will recognize the screenshot below from ISO-NE. We’ve written a lot about how they are islanded from natural gas even though they are a driver and pitching wedge from the Marcellus Formation in PA…..see the Jones Act and lack of pipelines for this situation.

Because oil is an important fuel in ISO-NE, the publish daily inventory reports. Below is a screenshot of the latest. Looking at the chart, the drawdown of inventory looks to be just over one million barrels over the last week or so during the storm. Historically the ISO starts the season with high inventory and draws down over the winter as demand dictates. Usually the curve is a nice glide slope down and not the double black diamond of the last week.

Just for some context, a Very Large Crude Carrier (VLCC) can carry two million barrels of oil. So over the last week the ISO burned roughly one half of the cargo of a supertanker. Another way to look at it, that same million barrels can be turned into 10 million gallons of gasoline and 5 million of diesel…roughly 200 to 300 million miles in a Silverado.