May 2017

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Did You Know - What is the Balancing Congestion Charge?

Many economic models account for congestion pricing. That pricing often refers to a surcharge that is passed on to customers when demand is outstripping supply, in order to smooth out delivery. Congestion, as it correlates to electricity networks, is related, though not an entirely analogous concept.

In reality, no actual congestion occurs in the grid transmission system. These systems don't slow down. Electricity doesn't become blocked or delayed. Rather, the grid authority is concerned that there will be a transmission capacity shortage during peak hours and that service would become interrupted to a waiting market. The authorities have two options to alleviate congestion. On the one hand, they can offer incentives for end-users to decrease their demand. On the other hand, they can add new infrastructure to increase system capacity.

PJM, the Regional Transmission Authority, filed a request with the Federal Energy Regulatory Commission (FERC) requesting additional funding for balancing its congestion requirement. FERC acceded to this request. The resulting order allocates balancing congestion charges to real-time load. Consequently, all PJM customers will now be paying this additional charge. Even accounts that have their electricity prices fully locked will be subject to this charge as a "Change in Law" as of 6/1/2017.

For more details on the Balancing Congestion Charge, please visit here.

LNG Markets Expanding

Liquefied Natural Gas (LNG) shipments have been growing at a steady pace. Ultimately the rate of expansion will depend on many factors. Each deal will have unique geographic, economic, and political elements.

In a recent first, Poland is taking its first LNG shipment from the United States, originating from Sabine Pass and expected to arrive in June 2017. It will be the first large LNG shipment into Northern Europe, and is viewed as an attempt to lessen Poland's regional reliance on Russia.

For more details about this story, click here

US Public Sentiment is Up for Renewables Regulation

The US public at large generally supports legislation and regulation aimed at the increase in renewable sources of energy, according to a recent study by the Pew Research Center. The study finds that 83% of Americans consider it an important priority to boost renewable energy sources as a means of combating other technologies that pollute more and reduce air quality. 

The demographics are as follows:
  • Political Affiliation: Democrats and Republicans are divided on their feelings about how the government can pare down regulations, while still protecting air and water quality.
  • Age: Great sensitivity to environmental concerns, as well as a desire to see the administration in Washington do more to further protections is a sentiment shared by the majority of adults under the age of 50, with numbers increasing in American adults under the age of 30.
  • Income bracket: Environmental policy appears to be less concerning to low-income Americans, who are more concerned with the impact on energy prices. 
For more details about this study, click here.

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