Factbox: Declines in power demand, prices emerge from coronavirus stay-home orders

After several weeks of stay-at-home orders in the US, it is clear that the coronavirus pandemic is producing significant power load declines, important shifts in load during the day and is contributing to much lower power prices across the nation.

Regional transmission operators and independent system operators are seeing a delay in the morning demand ramp, with office buildings and schools closed and many people no longer commuting. In nearly every region, demand is down. While residential use is up more than normal with most people working and schooling at home, the commercial sector typically is a much bigger energy user.

Peakload levels are falling, even more than should be expected given milder spring weather across the country. Grid operators continue to monitor the evolving situation and maintain there is no threat to grid reliability.

PRICES

**NYISO Zone J New York City on-peak real-time locational marginal prices have trended down over the past 30 days, currently averaging near $15/MWh, down $10 from month-ago levels. NYISO Zone J on-peak July-August is currently near $30/MWh, down $5 from levels at the start of the year and less than half of where the 2019 package traded this time last year.

**California Independent System Operator's SP15 on-peak day-ahead locational marginal price plunged 30% month on month and 23% year on year to average $17.72/MWh month to date. NP15 on-peak day-ahead LMP fell 13% month on month and decreased 6% year on year to average $23.25/MWh so far in April.

**SP15 on-peak real-time sank 37% month on month and is down 53% year on year to $16.46/MWh month to date, while NP15 on-peak real-time fell 16% month on month and decreased 34% year on year to average $22.10/MWh so far this month.

**SP15 on-peak May is averaging 38% lower this year than where the 2019 package averaged last April. On-peak June is down 34%, on-peak July down 68% and on-peak August is down 41%.

**Southwest Power Pool's North Hub on-peak day-ahead LMP has averaged $15.22/MWh so far this month, down 40% from the April 2019 average. SPP South Hub on-peak day-ahead LMP has averaged $15.28/MWh, down 35% year on year.

**SPP on-peak real-time averaged $12.64/MWh in March, down 35% year on year. North Hub on-peak real-time averaged $12.98/MWh, down 48% year on year.

**Midcontinent Independent System Operator's Indiana Hub on-peak day-ahead locational marginal price average closed at $15.34/MWh on March 29, the lowest price in six years.

**Electric Reliability Council of Texas North Hub July-August 2020 on-peak package has fallen from a high of about $150/MWh on January 10 to a low of less than $97.50/MWh on March 18 as the number of confirmed cases of novel coronavirus started to surge across the US. Since then, the package has been range-bound between about $102 and $110/MWh. In July and August 2019, day-ahead on-peak prices averaged about $109.50/MWh, but topped $757/MWh during a heat wave on August 16, 2019.

TRADE FLOWS

• **Power demand is down across the New York Control Area, with certain zones experiencing more dramatic drops in load than others. For the week of March 30-April 3, NYISO load was down 15% year on year, with weekend loads about 10% lower.

  **NYCA-wide power consumption reductions compared to typical demand levels ranged from 1% during the 12 a.m. hour to 12% during the 7 a.m. hour.

  **NYISO demand reductions are largest in the morning, particularly in Zone J New York City. For weekdays during the period of March 30 to April 3, reductions in power consumption in New York City approached 18% during the 7 a.m. and 8 a.m. hours. Overall, New York City hourly demand for that week ranged from 2% to 18% below typical demand levels.

• **Workday (Monday-Friday) NYISO average loads were about 15% lower year over year, according to S&P Global Platts Analytics.

  **On April 2, Hydro-Quebec and the New York Power Authority signed an agreement to provide mutual assistance to guarantee continuous power supply in both Quebec and New York State.

  **ISO-New England forecasters continue to see a 3% to 5% decline in overall consumer demand for power, a slower-than- normal power usage ramp in the morning and increased energy use in the afternoon.

  **Widespread economic shutdowns started March 16 in PJM Interconnection when reductions from the rolling five-year average March daily peak load and daily energy use were observed, but there was also statistically warmer weather, which contributed to the load reductions. Previous analysis has shown PJM load coming in about 5-7% lower than historical trends.

  **In Washington state, load is down about 10% year on year, when adjusted for weather, compared to the same time in 2019.

  **Cal-ISO peakload for March was down 5% from the five-year average, and peakload in April is down 9.5% from levels seen last year during the same period.

  **SPP load is down 4-6% compared to similar days with similar temperatures in previous years. SPP load reductions are mainly during daytime hours, suggesting the reductions are caused by changing work patterns.

  **MISO peakload hit a six-year low of 61,723 on April 11 with coronavirus demand destruction coinciding with seasonal changes. Month-to-date demand has averaged 66,750 MW, 8.9% lower year on year. MISO peakload fell 18% year on year in March. MISO's load shape changed in late March as more states in its footprint implemented stay-home orders, with morning and evening load levels lower than normal. Morning peaks are closer to noon compared to 9 a.m. in previous weeks.

  **ERCOT has found in its first weekly analyses of the load effects of the coronavirus pandemic that overall energy usage has fallen about 2%, and the morning ramp up in power demand has been down between 6% and 10%.

  **Industry observers are divided over the likelihood that the pandemic's demand effects might impact summer pricing in ERCOT's energy-only market, but concede that if the pandemic has long-term effects on the ERCOT economy, it could result in lower prices.

INFRASTRUCTURE

• **NYISO sequestered key control room operators onsite beginning March 23 to prevent them from contracting COVID-19.

• **ISO New England's market administration staff has transitioned to remotely clearing New England's wholesale power markets, ensuring the efficient dispatch of generating and demand-side resources.

  **Global 2020 solar PV installations were revised down 5%, or by about 5-7 GW: S&P Global Platts Analytics.

  **A Solar Energy Industries Association survey suggests a 55% decline in rooftop residential sales in 2020.

  **Moody's Investors Service expects business activity in the US to contract 4.3% in the first half of the year.

  **Mercom Capital says corporate and debt financing of solar in Q1 was down 31%.

  **The Federal Energy Regulatory Commission said it does not anticipate grid reliability impacts from the pandemic, and it continues to perform oversight tasks to ensure that the wholesale electricity markets are properly functioning. A number of rules and reporting requirements have been relaxed to reduce burdens on the regulated power sector.

  **The North American Electric Reliability Corp. has asked FERC to defer compliance deadlines for seven mandatory reliability standards set to become effective or be phased in during the latter half of 2020. NERC pointed to supply chain disruptions, limitations on staff availability and changes to outage and maintenance plans as impacts of the coronavirus pandemic that could make meeting compliance deadlines for new reliability standards challenging.

  **An April 9 MISO operations report said 10% of planned transmission outages have been delayed. MISO said that 16 GW of planned generation outages, by 30 generators across the MISO footprint, have been cancelled or rescheduled. And, 30% of those planned outages could be rescheduled to fall 2020. The rescheduling for another 30% are still to be determined, and outages for the remainder could be rescheduled prior to June. MISO said outages for 350 MW of generation is currently scheduled for early June.

  **Some PJM generators are reporting contractor crew and parts shortages due to coronavirus-related supply chain issues. PJM is equipping its campuses for sequestration, if needed, including the necessary logistics for an extended stay, and the grid operator is preparing its control room simulator to be used as a third control room, only if needed.

  **Measures to curtail the spread of COVID-19 could result in a delayed and shorter spring nuclear refueling season. Tennessee Valley Authority and other nuclear plant owners have already signaled changing plans to their maintenance schedule. Platts Analytics forecasts that 15 reactors still need to complete planned maintenance this spring.

  **Q2 power prices could be negatively impacted by higher nuclear output in conjunction with weakened loads due to wide scale stay-at-home orders. If postponed maintenance is done during fall 2020 and power demand bounces back, power price risks could skew bullish based on supply side tightness.