US POWER TRACKER: NYISO forward power prices ease heading out of summer

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New York Independent System Operator on-peak three-month forward power prices have been trading around $41.72/MWh, compared with an average of $103.75/MWh for the same period last year and on-peak Zone J New York City power prices are forecast to average $48.74/MWh for the remainder of the year, according to S&P Global Commodity Insights data.

NYISO Zone J on-peak power prices for August averaged $50.27/MWh in July trading, down about 58% from the year-ago average of $119.98/MWh, according to Platts M2MS data. Forward power at the hub for September averaged $39.31/MWh, down about 61% on year and power forwards for October averaged $35.58/MWh, down about 60% on year.

NYISO Zone G Hudson Valley and Zone A Western New York power forwards followed a similar trend.

Transco Zone 6 forward natural gas prices for August averaged $1.67/MMBtu in July trading, down about 75% from $6.66/MMBtu a year ago. Forward gas for September averaged $1.39/MMBtu, down about 77% from year-ago levels, and forward gas for October averaged $1.33/MMBtu, down about 77% on year.

NYISO Zone J gas prices at the Iroquois Zone 2 pricing point are forecast to average $2.92/MMBtu for the remainder of the year, with December averaging $5.02/MMBtu, according to S&P Global data.

Power generation fuel mix

"Natural gas-fired generation served almost the entire incremental demand in July, increasing from 7.3 TWh to 11.4 TWh, with the balance being served from incremental imports from neighboring balancing areas," S&P Global power market analysts said in their most recent North American Electricity Short-term Outlook.

Gas-fired and dual fuel resources, which primarily run on gas with a backup fuel like oil, accounted for 61.3% of the NYISO fuel mix in July, down from 53.7% in June and 59.9% in July 2022, according to ISO data.

Nuclear power accounted for 17.8% of the July fuel mix, down from 22.9% in June and 18.6% in July 2022.

Hydropower accounted for 17.2% of the power generation fuel mix in July, down from 19.5% in June and 17.4% in July 2022.

Wind power and other renewables rounded out the generation fuel mix, accounting for 3.3% in July, down from 3.9% in June and 3.8% in July 2022.

Power demand, market design

NYISO power demand increased 28% in July on month, driven largely by a late-month heatwave that pushed up peakloads and power prices.

Peakload averaged 24,872 MW in July, up from 19,371 MW in June but lower than the July 2022 average of 25,076 MW, according to ISO data.

The highest daily average peakloads were reached during the heatwave on July 27 and July 28 when power demand surpassed 28,000 MW. The elevated temperatures which averaged 91.6 degrees Fahrenheit on July 28 across the NYISO footprint, according to CustomWeather data, helped push NYISO Zone J on-peak day-ahead power prices to a daily average of $134.11/MWh on July 28.

Regarding reliability, the NYISO recently discussed with stakeholders its need to address a reliability shortfall by 2025 along with the process for soliciting proposed solutions to the 446-MW shortfall, which include soliciting non-generation transmission options.

The Short-Term Assessment of Reliability, or "STAR" for the second quarter found a short-term reliability need on the bulk power transmission facilities beginning in 2025 arising in New York City within Con Edison's Transmission District, with the reliability need based on a "deficient transmission security margin" that accounts for expected generator availability, transmission limitations, and demand forecasts, according to a NYISO statement.

The need observed in this STAR was not identified in prior versions primarily due to NYISO's updated power demand forecasts, NYISO said, adding that earlier analyses indicated that if the demand forecast increased by as little as 60 MW there could potentially be a reliability need, and the demand forecast increased by 294 MW.

The Q3 reliability report is planned for release on Oct. 13.