FERC’s 2022-2023 Winter Energy Market Assessment Projects Higher Natural Gas Prices

The Federal Energy Regulatory Commission staff on Oct. 20 issued its 2022-2023 Winter Energy Market and Reliability Assessment, providing an outlook for energy markets and electric reliability in the upcoming winter (December 2022 till February 2023).

Natural gas prices for the are expected to remain higher than recent years at major trading hubs across the U.S. The key driver of prices is expected to be continued growth and export demand for U.S. LNG. Prices are projected to be particularly high in the New England region, which partly relies on liquefied natural gas imports. Gas supply is anticipated to be restricted in New England during the upcoming winter.

Other key findings of the report are listed below:

• Above seasonal normal are projected for the upcoming winter in several regions of the U.S. which should directly impact demand. As a result of a warmer winter, demand for gas and electricity is expected to be lower.
• Winter 2022-2023 is projected to see an extension of the production capacity accumulation and retirement arrangement witnessed over the past few years.  Majority of the additional generation  is expected to come from solar and wind, whilst most of the downturn in generation will come from coal.
• Several regions may encounter coal supply and transportation limitations due to enduring rail service issues.
• Gas pipelines in California could also be subject to restrictions this winter due to ongoing pipeline outages.
• Regions have taken proactive actions to employ FERC recommendations for winter preparedness, on the back of Winter Storm Uri in February 2021.

The report concentrates and incorporates three main sections. The first section reviews weather projections for the impending winter. The second section outlines the natural gas and electricity market and electric reliability supply and demand fundamentals anticipated for the winter. The final section examines important factors for the forthcoming winter, involving coal supply issues, natural gas reliance in New England, natural gas pipeline disruptions in the West, and winter preparation development.

The report is a collaborative piece of work from the Office of Energy Policy and Innovation’s Division of Energy Market Assessments and the Office of Electric Reliability’s Division of Engineering and Logistics.