Congestion reverses power price trends in New York ISO

New York ISO Zone A West day-ahead wholesale power prices have bounced around this March as maintenance and generation outages have increased congestion in the region. This price volatility appears to have spilled onto the prompt-month forward power contract as the spread between West and other New York zones has widened.

NYISO Zone A day-ahead prices have ranged from $5.23/MWh to $54.62/MWh since the start of the year, with the highest prices seen in March, when the month-to-date average is about $27.50/MWh, compared to $21.25/MWh for January and February combined.

“Congested conditions in the west have been exacerbated by the retirement of the Dunkirk and Huntley units as well as scheduled maintenance outages,” NYISO Spokesman Ken Klapp said.

NRG had plans to convert the 530-MW Dunkirk plant to burn natural gas, but those plans were put on hold and the plant was mothballed January 1, although NRG has filed for new interconnections, NRG Spokesman David Gaier said.

NRG permanently retired the two-unit, 380-MW Huntley coal-fired plant March 1.

For the prompt-month package, Zone A on-peak prices have jumped to a range of $26.55/MWh to $38.10/MWh since Dec. 31, 2015, forcing the spread between Zones A and G to blow out.

Typically, Zone G is at a premium to Zone A. However, things have flipped this year with Zone A priced as much as $7.60 above with the gap the widest in March and showing an upward trend.

Further, in early March Zone A started climbing above ISO-NE’s Mass Hub April on-peak package, which typically is at a premium in the Northeast. Mass Hub April on-peak has ranged from $28.50/MWh to $45.50/MWh since December 31 and has been as much as $3.60 below Zone A in recent days.

Looking at 2015 prices, Zone A and G April on-peak packages had a spread range of $2.10 to $5.25 with Zone G being the premium package in NYISO.

NYISO expects up to 8,900 MW to be offline throughout the end of March due to scheduled maintenance and as much as 11,250 MW to be offline through mid-April.

Other Northeast generation outages could also be coming into play in the prompt-month price shifting.

Based on historical outage trends and engineer/plant manager input on a nuke industry message board, Platts’ unit Bentek Energy is currently expecting 3,260 MW of upcoming nuclear outages for the Northeast in April. Those outages include Constellation Energy’s 1,155 MW Nine Mile Point-2 in Oswego, N.Y., which is expected to start maintenance around April 11 with an estimated finish date of May 6 for an overall duration of 25 days, according to Bentek.

And looking down the road, Morningstar energy analyst Jordan Grimes sees transmission upgrades as a key part to helping solve congestion issues.

“We are bearish Zone A constraints throughout the curve even in the face of the Huntley retirement in March,” Grimes wrote in a NYISO term outlook last month. “We believe National Grid transmission upgrades and flows from PJM will eventually solve constraints.”

National Grid's Western Reinforcement transmission project will help relieve Zone A congestion; the market is overstating the impact of the Huntley retirement, given current dispatch rates, Grimes wrote.

“Zone A is certainly going to be volatile in April and May and as of now it certainly doesn’t looked solved as the congestion is worse than expected,” Grimes told Platts Wednesday. “But transmission upgrades will solve the constraint eventually, the impact of the June upgrades will be important. NYISO could also re-rate the 230kV lines to its emergency max in the short term to help alleviate congestion.”

National Grid has proposed adding series reactors to the most constraining 230 kV lines north of Huntley, with a planned in-service date of June 1 to improve the total Niagara Power Project and Ontario import energy deliverability, NYISO Executive Vice President Richard Dewey wrote in a letter to the State of New York Department of Public Service. The series reactors would improve the total Niagara Power Project and Ontario import energy deliverability, but there would still be a reduction compared to the levels of energy deliverability that existed when the Dunkirk and Huntley plants were available.

This reduction in energy deliverability will persist until permanent solutions are in place, Dewey wrote. In the interim, the NYISO and National Grid are considering a temporary operating procedure to allow the constraining National Grid 230 kV lines to be secured to the higher short-term emergency ratings to improve Niagara Power Project and Ontario import energy deliverability.