Posted: February 13, 2026, 11:51 am

Sound the Alarm?

Late in January, NERC- The North American Electric Reliability Corporation, released their 2025 Long Term Reliability Assessment (LTRA). This is an annual release studying the future reliability of the various North American ISOs and balancing authorities…a sort of state of the grid, if you will. While the report is comprehensive, well written and full of information, scrolling to the maps below tells the story. A few years ago NERC started including risk maps with a five year outlook showing where there could be a shortfall of generation and transmission. Below is the 2022 map on the left with this year’s map on the right. While the legend may be hard to read, it’s pretty intuitive…orange is concerning, red is high risk. In the latest map, high risk red starts to show up a little more, and when you take into account major population centers, it’s a lot more.

As stated, this study is a five year look ahead and the graph below breaks down where and when the highest concern. As expected, the real concern is the lack of generation that is being built to meet the future demands, particularly datacenter. The new generation mix and retirements are a concern as stated in the executive summary….

“most new resources in development to come on-line in the next five years consist of battery storage and solar photovoltaic (PV), which are inverter-based and weather-dependent resources that increase the complexity of planning and operating a reliable grid. Meanwhile, more fossil-fired generator retirements loom in the next five years, reducing the amount of generation that has fuel on site and impacting the system’s ability to respond to spikes in demand”

We only need to go back a couple weeks to see what the last part of that statement looks like. The replacement of stockpiled coal generation with just-in-time delivered natural gas has been a winter concern of ours and seems to grow each year with one cold snap.

This study does a great job of breaking down each region, so click on the link and find the most relevant comments.

Capacity seems to make its way to these pages weekly. This week, FERC rejected a waiver request from AEP to sell some of their capacity in the upcoming incremental capacity auction, which is different than the base auction for capacity three years forward. AEP typically owns enough assets to cover their own capacity which are considered Fixed Resource Entities and aren’t in the auction. Without getting to deep into the process, PJM is allowed to let these resources into the auction if there is the possibility of a shortfall. Because PJM lowered it’s peak demand, they have enough capacity for the next planning year and thus a surplus of capacity.

Interestingly, PJM supported the waiver while Market Analytics, their market monitor did not along with other independent power producers in PJM. According to Utility Drive, critics of the requested waiver said that AEP was attempting to recover costs from assets they built to serve datacenters that have yet to be launched.

Natural Gas Market Commentary

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With winter risk fading fast and weather models locked into a mild pattern, the natural gas market has shifted decisively back into “wait and see” mode.

It was a relatively quiet week of trading by recent standards. Most of the weekly losses occurred on a gap lower at the open last Sunday evening, as traders reacted to another round of mild model runs. From there, price action settled into a tight, back-and-forth range. The March NYMEX contract is on track to finish roughly $0.20 lower on the week, but volatility has remained notably subdued. The rest of the curve followed with modest declines, though nothing resembling the extreme swings seen during the height of the January cold.

On the fundamental side, the EIA reported a 249-Bcf withdrawal for the first week of February. That figure capped a remarkable three-week stretch driven by the recent cold event. Over that period, inventories declined by a combined 851 Bcf — the strongest three-week draw on record.

As a result, stocks have flipped back to a deficit versus both last year and the five-year average. Even so, with mild weather now dominating the outlook, end-of-season inventories are still projected to land near 1.7–1.8 Tcf. That would leave storage broadly in line with historical benchmarks and far removed from the ultra-bullish fears that briefly gripped the market when February cold risk appeared open-ended.

Weather models currently show no indication of a meaningful pattern change as we enter the home stretch of winter. Demand has fallen sharply from January highs, while production has recovered back near record levels. LNG feedgas remains strong — hovering near 20 Bcf per day and close to capacity — but the market is able to easily absorb this as long as weather-related demand stays in check.

In short, the market appears comfortable for now. Prices remain above pre-cold levels but well off the panic highs seen when traders feared a prolonged Arctic regime. With supply rebounding, LNG steady, and weather turning cooperative, the balance of winter increasingly looks like a matter of running out the clock barring any late-season surprises.

Cocktail Corner

We’ve covered the great EV write down on these pages over the last year. Ford, $19B, GM $9B, and even Hertz taking a big write down to rid their inventory of Tesla vehicles. This week Honda posted a 61% drop in quarterly profits hit by tariffs and the restructuring costs tied to EVs. Frankly, after Ford, we’d thought we’d seen the biggest pain with $19B. Late last week, Stellantis decided to join the list and took a write down of $26.5B which is nearly the size of Ford and GM combined.

The statement from CEO Filosa pretty much summed up the current state of EVs when he said after an overestimation on “energy transition” a new strategic plan would be presented May 21. It didn’t take S&P or Moody’s long to downgrade the debt both cited the write down along with profitability and cashflow.