Dive Brief:
- SNL Energy reports Wall Street analysts are expecting a lackluster earning seasons for the power sector, as company's continue to deal with the impacts of a mild winter and low power and natural gas prices.
- Companies are expected to focus on commodities, weather, the upcoming PJM Interconnection auction and recently-approved power subsidies in Ohio in upcoming earnings calls.
- Merchant generators have asked the Federal Energy Regulatory Commission (FERC) to pull affiliate waivers that allowed a series of power purchase agreements in Ohio, where AEP and FirstEnergy say they need income guarantees for a handful of older plants.
Dive Insight:
Power companies will begin reporting earnings soon, and SNL Energy reports the results are likely to show a year-over-year decline on the back of mild weather, cheap power and a range of familiar cases with wide-ranging uncertainties.
In Ohio, FirstEnergy and AEP are still facing pressure over their power purchase agreement that guarantee income for an array of struggling plants, most of them coal-fired. State regulators approved the deals, but SNL reports Morgan Stanley expects FERC will ultimately reject the plans.
Generators Dynegy and NRG Energy have appealed to federal regulators to rescind a waiver that allows the two utilities to engage in affiliate power transactions. Both merchant generators proposed to instead supply their own power to Ohio consumers along with passing on billions in savings.
Earnings calls are also likely to tackle expectations for the PJM capacity auction, set for next month.
Coming out of the warmest winter on record will also play a factor: The U.S. Energy Information Administration said wholesale natural gas and power prices in the Northeast "remained relatively low this winter, absent the large spikes that have occurred during recent winters. A combination of increased deliveries of liquefied natural gas into the region, a fuel adequacy winter reliability program, and the warmest winter on record helped to keep prices low and stable."
Day-ahead peak period electricity prices at the Massachusetts Hub peaked at $66/MWh this winter, EIA said, down from peaks of $211/MWh during the previous winter and more than $400/MWh the winter before that. Prices in New York City peaked at $71/MWh this winter, down from highs of $223/MWh during winter 2014-15 and $519/MWh during winter 2013-14.
