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PJM Board Orders Reliability Measures as Power Demand Accelerates

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PJM will file two proposals with the Federal Energy Regulatory Commission as it expects large electricity loads to increase by 70 gigawatts by 2038, the grid operator said Monday.

The proposals would establish a Reliability Backstop Procurement to attract new generation and an Interim Resource Adequacy Service to support large load growth while protecting reliability during periods of capacity shortages.

PJM expects new large loads to increase by 70 GW by 2038, while 15 GW of generation has retired since 2022. The 2028/2029 capacity auction also ended 6,831 megawatts below the system's reliability requirement for the grid serving 67 million people.

The board said the region needs additional power supplies without placing unnecessary cost burdens on consumers.

"The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable," the board said, adding that the "region needs substantial new investment in supply, and the central affordability question is how the costs of that investment should be allocated."

PJM launched a bilateral contracting process with a June 9 request for proposals and expects the first buyer-seller matches in August. The process will continue into early next year and reduce the amount of new generation PJM needs to procure.

The grid operator plans a one-time Reliability Backstop Procurement from Sept. 30 through Oct. 21, with results expected in early December.

Winning projects can secure commitments of up to 15 years, while accepted offers will face a $555/MW-day cost cap, according to PJM.

Eligible resources include new generation that adds new installed capacity and maximum facility output, qualifying Capacity Interconnection Rights created or transferred from units deactivated after April 10, 2026, and resources that failed to secure commitments in the 2028/2029 auction.

The proposal also covers new annual demand response and distributed energy resources, provided aggregators demonstrate qualifying sites and contracts for the full 15-year commitment. Eligible projects must begin operating by June 1, 2032.

Resource developers will pay for transmission network upgrades and include those costs in their offers.

PJM will allocate procurement costs to Load Serving Entities in affected areas, while state regulators will determine how those costs apply across customer classes.

The board also instructed PJM to exclude incremental new large loads from future Reliability Pricing Model auctions beginning with the 2029/2030 delivery year.

The move aims to prevent existing customers from absorbing higher capacity costs created by new demand.

PJM will create a Large Load Registry for customers with at least 50 MW of peak demand at one site or connected sites within a one-mile radius. The registry will improve load forecasts and transparency while protecting confidential information.

Under the proposed Interim Resource Adequacy Service, new large loads without dedicated generation by June 1, 2027, or other secured supply will reduce demand before broader emergency load management measures begin during capacity shortages.

PJM said the proposed cost allocation framework follows Ratepayer Protection principles supported by data centers, the White House and PJM governors.

The board added that states will play a key role in assigning retail costs because PJM cannot allocate them directly to individual data centers.

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Correction: US Natural Gas Prices Post Another Weekly Decline on Bearish Storage Build, Weak LNG Feedgas Flows

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$BKR
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US Natural Gas Prices Post Another Weekly Decline on Bearish Storage Build, Weak LNG Feedgas Flows

US natural gas prices ended another week in the red, pressured by a larger-than-expected injection into storage and lower liquefied natural gas feedgas flows.In the futures market, the Nymex front-month August contract closed the week at $2.883 per million British thermal unit, after falling as low as $2.858/MMBtu last Thursday.Natural gas spot prices rose $0.15/MMBtu to $2.95/MMBtu during the week ended July 22, from $2.80/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released Thursday.Despite warmer-than-normal temperatures across the country for the second week in a row, total natural gas demand dipped during the week by 0.6 billion cubic feet per day, or 1%, even as gas output remained unchanged at 110.8 Bcf/d during the week.Prices were mixed across most regional hubs, ranging from a $0.54/MMBtu decrease at Algonquin Citygate, which primarily serves the Boston area, to a $0.71/MMBtu increase at the SoCal Border.Western parts of the country reported higher natural gas consumption overall, by 10%, largely due to the heatwave over the past week, according to LSEG data.Total demand was also impaired by low US LNG feedgas flows during the week, which averaged 17.4 Bcf/d, compared to the 30-day moving average of 18.41 Bcf/d, and significantly below the recent peak of 20 Bcf/d reported earlier this year.This was primarily due to the Freeport LNG terminal in Texas entering into planned maintenance starting July 10, and set to last until late August.The net injection into storage for the week ended July 17 was 32 Bcf, down from last week's 41 Bcf, bringing total gas inventories to 3,056 Bcf, according to EIA data.Storage injections were above forecasts, which had expected a net injection of 29 Bcf. This was also above the prior year's 23 Bcf net injection and the five-year average for this period of 30 Bcf, according to data compiled by Investing.com.The East and Midwest regions reported net injections of 17 Bcf, while South Central and Nonsalt reported 2 Bcf and 9 Bcf, respectively.Inventories remained above the five-year average across most regions, with the highest surpluses recorded in the Mountain and Pacific regions at 19% and 6% above their prior-year levels.According to Pinebrook Energy Advisors, this week's storage figures imply "that market fundamentals tightened by nearly 1.5 Bcf per day from the previous week," which it attributed to warmer temperatures and weaker wind power generation during the report period.Weather forecasts continued to point toward above-normal temperatures across most of the country from July 31 through August 06, according to the National Weather Service, leading to elevated space-cooling demand and gas-fired power burn.A total of 34 LNG carriers departed US ports during the week, unchanged from last week, with a combined capacity of 126 Bcf, down 5 Bcf from the prior week.In international markets, European TTF gas prices averaged $19.63/MMBtu for the week ended July 22, $2.39/MMBtu higher than the previous week. Meanwhile, the Japan-Korea Marker averaged $21.05/MMBtu, about $4.43/MMBtu above the prior week.The US gas rig count increased by one from 126 the previous week to 127 in the week ending July 24, according to data from Baker Hughes (BKR) released Friday. That compares with 122 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by 5 to 791 from 786 the previous week.

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Commodities

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