PJM TRACKER: Cooler weather, higher loads boost January PJM power, gas prices

PJM Interconnection power prices in January jumped about 50% from December and roughly 100% from year-ago levels with power demand around 8% higher in January as colder weather affected overall electric heating loads.

PJM East Hub saw the highest January spot power prices. Real-time on-peak averaged $90.39/MWh, up 262% from January 2021 and 140% above the December average of $37.65/MWh.

PJM East Hub day-ahead on-peak power prices averaged $75.02/MWh in January, nearly 200% higher on year and 86% above December.

PJM West Hub day-ahead on-peak power prices averaged $71.63/MWh in January, 164% higher on year and about 73% higher on month.

Moving farther west, AEP Dayton Hub January day-ahead on-peak power averaged $55.37/MWh, about 111% above year-ago levels and 41% higher on month.

Northern Illinois Hub saw the lowest January spot power prices, with day-ahead on-peak prices at the hub averaging $47.38/MWh, about 92% higher on year and 37% higher on month.

Texas Eastern Transmission natural gas prices surged in January to average $9.92/MMBtu, 248% higher on year and nearly 200% above the December 2021 average of $3.31/MMBtu.

Chicago city-gates gas prices averaged $4.17/MMBtu in January, 65% higher than a year ago and about 16% higher on month.

PJM peakload was 17% higher in January than December 2021, with peakload averaging 112,953 MW compared with an average of 96,900 MW in December, according to ISO data.

"Our outlook for load growth in PJM is a decline over the next five years at around 0.3% in 2022 and 2023, before flattening out for the rest of the period," S&P Global Platts Analytics said in a recent research note.

January was considerably colder than December in PJM territory, with an average January low temperature of 20.8 degrees Fahrenheit compared with 36.1 F in December, according to CustomWeather data.

Heating degree days averaged 36.5 in January, up from 21.3 in December. HDDs were 20% higher on year, Platts Analytics said.

Power generation fuel mix

"Coal output in January was up 72% compared to December due to the expected higher seasonal demand," Platts Analytics said. The incremental demand also lifted coal 24% year on year, "showing the region opted to tap into coal as gas-fired generation was up by only 2% year on year," the analysts said.

Coal-fired power accounted for 27.4% of the fuel mix in January, up from 17.5% in December, according to PJM data.

Gas-fired power accounted for 33.5% of the January fuel mix, down from 38.7% in December. "We anticipate a significant number of gas-fired generation units to be completed and operational in the 2022-23 time frame, with a slowdown starting in 2024," Platts Analytics said.

Nuclear accounted for 31.4% of the fuel mix, down from 35.8% in December and hydropower was flat month on month.

Wind power fell slightly, accounting for 3.9% of the January fuel mix from 4.7% in December.

Forward power, gas prices

Forward power prices were flat to lower on month during January trading. The highest price was PJM West Hub for February, which averaged $69.01/MWh, only about 2% higher on month, but 119% higher than where the package traded in January 2021, according to Platts M2MS data.

PJM West power for March averaged $52.11/MWh and the April contract averaged $48.09/MWh.

AEP Dayton Hub power for February averaged $60.55/MWh, a 3% decline on month but 103% higher than January 2021. The March contract averaged $48.42/MWh in January trading, 69% higher on year, and the April contract averaged $48.13/MWh, or 65% higher on year.

Northern Illinois Hub power for February averaged $53.14/MWh in January trading, relatively flat on month and about 97% higher on year. The March contract averaged $41.57/MWh, 60% higher on year, and the April contract averaged $42.30/MWh which was 65% higher on year.

Platts Transco Zone 6 non-New York gas prices for February averaged $7.27/MMBtu in January trading, which was about 8% higher on month and 115% higher on year.

The March contract averaged $4.23/MMBtu, 63% higher on year, and the April contract averaged $3.42/MMBtu in January trading which was about 51% higher on year.

"With gas prices expected to average around $3.40/MMBtu at M3 and around $2.80/MMBtu at Columbia, we anticipate coal-fired generation to decline in PJM through the next four years," Platts Analytics said.

"On-peak power prices are expected to decline through 2024 before they reverse that trend in 2025 and stay flat in 2026, with these movements mainly driven by fluctuations in gas prices," the analysts said.