NYISO Tracker: Power prices plunge on pandemic-weakened loads, gas prices

Pandemic-driven weak power demand combined with plunging natural gas prices to crash New York Independent System Operator on-peak wholesale power prices by 46% to the lowest prices – around $15.50/MWh -- in April among the eight US power regions, and summer forwards followed suit.

Day-ahead on-peak locational marginal prices posted an average decline of 48.5%, year on year, to $16.40/MWh in New York City Zone J, and the West Zone A prices averaged down 46.5% to $14.04/MWh.

Among the eight US power market regions included in S&P Global Platts' monthly Power Tracker analysis, Southwest Power Pool had the second-lowest average prices, with SPP North Hub down almost 35.8%, year on year, to $16.41/MWh, and SPP Souh Hub down 29.6% to $16.53/MWh.

"Nearly all of the price plunge in New York is due to COVID-19, which has brought business and social activity to a halt, an extraordinary development," said Matthew Cordaro, a former Midcontinent Independent System Operator president and CEO who now resides in New York.

Last Thursday's shutdown of the 1,026-MW Indian Point nuclear power plant's Unit 2, NYISO is likely to have "some upward pressure," Cordaro said in an email Friday.

"However, New York will be dealing with COVID-19 and its after effects for at least the coming months, which will continue to put significant downward pressure on demand and prices," Cordaro said.

FORWARD MARKETS

Such bearish sentiment is reflected in power forward markets, as NYSO Hudson Valley Zone G July-August 2020 on-peak forwards averaged just about $27/MWh in April, down from the July-Augus 2019 average of about $40.25/MWh, but up slightly from this March's average of about $26.70/MWh. The package hit a year-to-date high of about $32/MWh on January 9.

NYISO data shows daily peakload averaged just 15,956 MW in April, down 9.4% from March and down 7.4% from last April's average.

But the weather was not a factor in the year-on-year peakload decrease, as this April's average heating-degree day number was 36.5% higher than last April's, and daily lows averaged 41 degrees Fahrenheit this April, down from about 44.8 degrees F last April, according to population-weighted average data from CustomWeather.

"The [price] move is directly attributable to the virus pandemic due to the fact that the main population centers of the state of NY are in an extreme state of shutdown," said Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, an interdealer commodity broker.

"It's not surprising as compared to the Midwest and South, which have much more limited stay-at-home orders," Faulker said in an email Friday.

New York leads the nation in novel coronavirus infections by a wide margin – almost 324,000 cases and 24,648 deaths as of Sunday, according to Worldometer.info, which is based on state and federal data. New Jersey was second with about 127,000 cases and almost 7,900 deaths.

Gurcan Gulen, principal at the G2 Energy Insights consultancy, said, "Low [natural gas] prices must have played a role as well."

Natural gas prices have been hit hard along with most of the energy complex, as OPEC and Russia failed to initially agree to crude oil production cuts to cope with plunging demand related to the novel coronavirus pandemic.

At the Transco Zone 6 New York pipeline, spot gas this April averaged $1.51/MMBtu, up slightly from March's average of $1.491/MMBtu but down by more than 36% from April 2019's $2.372/MMBtu.

GENERATION MIX

Gas increased its share of NYISO's generation mix on the year, but was down from this April. This April's share was 17.6%, up from last April's 16.3% but down from this March's 19.1%.

Dual-fuel was down on the month and year, providing 12.7% of this April's supply, down from 17.4% in March and 17.9% last April.

In contrast, the shares of nuclear, hydro and renewables were up, as follows:

• Nuclear: 34.9% (leading share), up from this March's 30.3% and April 2019's 33.8%;
• Hydro: 27.8% (No. 2 share), up from this March's 25.4% and April 2019's 25.6%; and
• Combined wind and non-wind renewables: 6.9% (No. 5 share), up from this March's 6.6% and April 2019's 6.2%.