US POWER TRACKER: PJM prices fall in March tracking lower gas prices, demand

For access to all regions of the US Power Tracker series, subscribe to Platts Dimensions Pro.

PJM Interconnection wholesale power prices were mixed in March and down sharply from the same month a year ago while spot natural gas prices dropped around 37% on month and 50% on year, and power demand declined on month as temperatures rose heading into spring.

On-peak power prices at PJM Western Hub are projected to average around $47.60/MWh in 2023, down from $56/MWh in January's outlook, according to S&P Global Commodity Insights power market analysts.

"The natural gas price curve for 2023 has been revised downward as the market now appears likely to be well-supplied throughout the year," the analysts said in their latest North American Electricity Short-term Outlook. "As a result, the PJM Western Hub price curve has shifted down by roughly 10% for 2023, relative to our previous short-term outlook," the analysts said.

Forward power, gas prices

PJM West Hub on-peak forward power prices for April averaged $35.99/MWh in March trading, which was about 36% below the $56.56/MWh average price from a year ago, according to Platts M2MS data. The April package was down 4.83% on the month. Forward power at the hub for May averaged $38.70/MWh, down about 35% on the year and down around 4% on the month, and forward prices for June averaged $44.32/MWh, down about 27% on the year and down almost 1% on the month.

AEP-Dayton Hub on-peak forward power prices for April averaged $32.42/MWh during March trading, down around 35% on the year and 3% on the month. Forward power prices for May averaged $38.90/MWh, down about 34% on the year and 4% on the month, and forward power for June averaged $44.78/MWh, down roughly 26% on the year and flat on the month.

Northern Illinois Hub on-peak power prices for April averaged $29.70/MWh in March trading, a decrease of about 37% on the year and around 6% on the month. Forward power prices at the hub for May averaged $32.30/MWh, a roughly 26% decline on the year and flat on the month.

Platts Transco Zone 6 Non-New York forward gas prices averaged $2.11/MMBtu in March trading, down about 50% on the year and down around 4% on the month. Forward gas prices for May averaged $2.14/MMBtu, which was also a decline of about 50% on the year and 4% on the month, and forward gas prices for June averaged $2.37/MMBtu, a roughly 46% decline on year and down about 3% on the month.

Power generation fuel mix

Coal-fired power accounted for 15.1% of PJM's March fuel mix, up from 14.4% in February and down from 18.4% in March 2022, when gas prices were significantly higher, according to ISO data.

Gas-fired power accounted for 42.8% of the March generation mix, essentially unchanged from 42.7% in February, but up from 38.3% in March 2022.

Nuclear power supplied 32.5% of PJM's generation mix in March, down from 33.7% in February and 33.6% in March 2022.

Hydropower accounted for 2% of the fuel mix in March, up from 1.8% in February and down from 2.5% in March 2022. Wind power accounted for 5.4% of the fuel mix in March, relatively unchanged from 5.5% in February and up slightly from 5.2% in March 2022.

Spot power, gas price dynamics

"On-peak power prices at the PJM Western Hub continued their tumble in March owing to lower natural gas prices and weaker electricity demand," the S&P Global analysts said.

PJM Western Hub on-peak day-ahead power prices averaged $30.43/MWh in March, down nearly 37% on the year and down about 11% on the month, according to ISO data. On-peak real-time prices at the hub averaged $28.84/MWh, a decrease of 37% on the year and an increase of around 9% on the month.

Northern Illinois Hub on-peak day-ahead power prices averaged 24.88/MWh in March, which was down about 39% on the year and down roughly 7% on the month.

AEP-Dayton Hub on-peak day-ahead power prices averaged $30.10/MWh in March, down about 36% on the year and up around 2% on the month.

PJM East Hub on-peak day-ahead power prices averaged $25.48/MWh in March, a decline of about 41% on the year and down almost 24% on the month.

Texas Eastern gas prices averaged $2.23/MWh in March, down about 50% on the year and down around 37% on the month, according to Platts price assessments.

PJM power demand declined 2.9% on month in March with peakload averaging 95,583 MW compared with an average of 98,409 MW in February, according to ISO data. Average peakload climbed 1% on the year.

Power demand softened with higher temperatures, which were above average in March. The average March temperature across the PJM footprint was 43.8 degrees Fahrenheit compared with a historical average of 43.2 F, according to CustomWeather data.

The higher temperatures decreased the average heating degree days to 20.7 in March from 23.0 in February.