US POWER TRACKER: MISO January power prices soften amid lower loads, gas prices

Lighter loads and weaker natural gas prices pushed Midcontinent Independent System Operator wholesale power prices lower on the month and year and March on peak power followed area natural gas prices lower

"January weather was much milder than the preceding year, resulting in an 8% decline in loads, which was only partly offset by lower wind generation," said Morris Greenberg, senior manager for North American power analytics at S&P Global Commodity Insights.

Wind capture prices also had a big drop month-on-month, after spiking during the December storm. In January, Indiana Hub wind capture prices averaged $37.16/MWh, down 47.4% from December prices of $70.62/MWh and down 28.8% from $52.20/MWh in January 2022.

Wind performed well during the December cold snap, which boosted Indiana Hub wind capture prices to the triple digits Dec. 23-27, peaking at $205.13/MWh Dec. 25, according to S&P Global data.

A renewable capture price is the price of electricity sold by a renewable resource at the time it is sold, which can vary significantly in real-time.

The January decline in capture prices follows a decline in penetration, according to the S&P Global Renewable Penetration Index database. During on-peak hours, wind penetration averaged 11.6% in January, down from 13.5% in December and 13.2% in January 2022.

Coal accounted for 33.3% of MISO's generation mix in January, down from 34.4% in December and 37% in January 2022. Natural gas came in neck and neck with coal at 33.3% in January, up from 31.8% in December and up from 29.8% in January 2022. Nuclear displaced wind to take the third spot in the fuel mix, accounting for 16.2% of generation, followed by wind at 14.6%.

January prices down

Average day-ahead on-peak locational marginal prices in January at select locations were down 37.8% month on month and down 24.2% year on year, according to S&P Global data. At the Indiana Hub, prices averaged $41.66/MWh in January, down 39.4% from the December average price of $68.76/MWh and down 30.5% from the January 2022 average price of $59.96/MWh.

The biggest month-on-month drop was at the Texas Hub, where prices averaged $30.95/MWh in January, down 43.9% from the December average price of $55.20/MWh and down 19.3% from the January 2022 average price of $38.37/MWh.

The month-on-month decrease in prices was partly from a return to milder weather after the December cold snap.

Population-weighted temperatures averaged 31 degrees Fahrenheit in January, an 8.8% increase from the December average of 28.5 F and a 58.2% increase from the average of temperature of 19.6 F in January 2022, according to CustomWeather data. Population-weighted heating degree days were also down 25% year on year.

The milder weather lightened peakload, which averaged 81.9 GW in January, down 8.8% from January 2022, according to MISO data.

Lower gas prices

Lower gas prices also played a key role in lowering wholesale power prices in January. Henry Hub spot prices averaged $3.294/MMBtu in January, down 41.5% on the month and down 22.9% on the year. Chicago city-gates spot gas averaged $3.247/MMBtu, down 47.1% from December and down 22% from January 2022, according to S&P Global data.

Power burn was 3.4 Bcf/d in January, down from 3.7 Bcf/d in December and down from 3.9 Bcf/d in January 2022, according to S&P Global data. March power burn is expected to be 3.4 Bcf/d in March, up from 2.7 Bcf/d in March 2022, assuming a heat rate similar to that month.

Power and gas forwards

March power and gas forwards were down from December. Indiana Hub March on-peak power averaged $47.42/MWh in January, down 34.8% from the $72.76/MWh it averaged in December and down 9.2% from the $52.22/MWh that March 2022 forwards averaged in January 2022, according to S&P Global data.

Louisiana Hub March on-peak power averaged $40.02/MWh in January, down 38.8% from the $65.36/MWh It averaged in December and down 15.6% from the $47.42/MWh that March 2022 forwards averaged in January 2022.

Chicago city-gates March gas averaged $3.165/MMBtu in January, down 36.9% from the $5.016/MMBtu that it averaged in December, and down 21.3% from the $4.022/MMBtu that March 2022 gas averaged in January 2022, according to S&P Global data.

Henry Hub March forwards averaged $3.165/MMBtu in January, down 36.9% from the $5.016/MMBtu that it averaged in December, and down 21.3% from the $4.022/MMBtu that March 2022 gas averaged in January 2022.