Northeast Region

与此同时,在东北地区,有必要反对sider other unique factors that affect price. Carbon pricing, which has been a regulatory talking point in NYISO since 2019, has come back into focus and may become a reality in 2021. In addition, the Indian Point nuclear facility north of New York City is set to take its final unit offline in April of 2021. These unique circumstances have resulted in a contango pattern within NYISO Zone J, meaning that electricity prices are lower now, and get more expensive with each consecutive year into the future.

However, it’s important to note that in the very same region, fixed natural gas prices are not in contango — just the opposite. Transco Zone 6 (which feeds into NYISO Zone J) gas prices are in backwardation, meaning that prices go lower as contracts move further out into the future: ‘22 index being the most expensive; followed by ‘23, which is cheaper; followed by ‘24; and so on. Obviously, this means that gas and electricity prices are disconnected somewhat, the insight is that this decoupling may be thanks to the potential effect of carbon pricing. Subsequently, the steady price levels we’re seeing now may serve as price supports for the year to come as the COVID-19 pandemic stabilizes and regulators re-shift their focus to sustainability.

Carbon Pricing

Along the same lines, on-peak energy prices in PJM have begun to follow a contango pattern too, while natural gas prices in the region remain in backwardation. Why? Carbon pricing is being discussed for PJM, and although talks have not progressed as quickly as they have in NYISO, the market is responding by placing a premium on more distant futures as the likelihood of a carbon pricing initiative increases. Given the uncertainty surrounding this initiative and the corresponding early indicators in the market, a managed energy product could help buyers make informed decisions and protect themselves from potential cost increases over the coming year.