Webinar Analysts: Capacity Market Updates, Winter Storm Review and Key Market Fundamentals
During Constellation’s February Energy Market Intelligence Webinar, the Commodities Management Group (CMG) provided comprehensive coverage of current and future factors that could affect the energy landscape, including a review of the winter months, natural gas fundamentals, capacity market updates and an overview of how ISOs performed during grid stress events.
Weather
Chief Meteorologist Dave Ryan provided a review of the meteorological winter, which largely tracked close to long term (30 year) normals, though weather conditions varied significantly by region and had clear impacts on energy markets. The Northeast and Great Lakes experienced colder than normal conditions with above normal snow cover, while much of the West, particularly the Rockies and California, saw a notably warm winter that limited snowpack but improved reservoir levels through runoff.
Looking ahead, March is viewed as a highly volatile transition month. With no strong El Niño or La Niña signal in the Pacific, the outlook depends heavily on atmospheric blocking patterns. The expectation is for a colder than normal start to March, and there is a credible risk that blocking returns later in the month, leading to a colder finish that could extend into early April.
Natural Gas Fundamentals
Natural gas fundamentals have shifted rapidly from tight to more balanced, driven primarily by the recovery from Winter Storm Fern. Production rebounded quickly after freeze‑offs that had temporarily reduced output by as much as 15–17 Bcf/d, with U.S. dry gas production running around 109 Bcf/d at the time of the discussion. While production levels are near record highs, the expectation is that growth may flatten later in 2026, reflecting lower price signals, capital discipline and financing considerations, even though overall supply remains robust.
Looking at storage, market expectations shifted significantly over the course of the winter. Early concerns about oversupply faded in January after a record weekly withdrawal of 360 Bcf. By end of March, storage levels were projected to exit winter near or slightly below the five year average, reducing earlier concerns about oversupply and providing support for prices heading into the second quarter.
PJM Capacity Auction
The team covered the PJM capacity auction, focusing on growing reliability concerns driven by declining reserve margins, accelerating load growth and uncertainty around future supply. PJM missed its target reserve margin in the most recent auction, marking the first time it fell below its stated reliability goal, which has heightened scrutiny of the capacity market design. In response, PJM has proposed extending the existing price collar for the next two auctions as a near term stabilizing measure, while it evaluates longer term structural changes. The team also highlighted processes aimed at ensuring reliability as PJM faces the prospect of 50–60 GW of generation retirements over the next decade.
MISO Capacity Auction
The team also covered the MISO capacity auction, emphasizing that the market is increasingly shaped by declining reserve margins, structural generation retirements and growing demand, which together are driving higher and more volatile capacity prices. Speakers highlighted that MISO has retired roughly half of its coal‑fired generation since the early 2000s. These retirements, combined with strong forward load growth from data centers, electrification and reindustrialization, are tightening reserve margins and increasing the risk profile of the system.
MISO’s shift from a vertical demand curve to a Reliability Based Demand Curve (RBDC) was also highlighted as a key driver of recent and future auction outcomes. Under this structure, tighter reserve margins, especially in the summer, have translated into sharply higher clearing prices, including record levels in recent seasons.
Market Trends and Temperature
The webinar concluded with a look at forward power charts, including conversations about “the right time to buy,” the “Market Temperature” and other factors affecting the energy market.
We invite you to join us for our next Energy Market Intel Webinar on Wednesday, March 25 at 2 pm ET. Constellation will offer detailed and timely updates on factors affecting the energy landscape such as weather, natural gas storage and production, and domestic and global economic conditions. Register by visiting www.constellation.com/marketintelwebinar.
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