US POWER TRACKER: PJM Interconnection power forwards remain lower on year

PJM Interconnection West Hub on-peak forward power prices for October, November and December were down 60% compared to the same period in 2022, with forward natural gas prices for those months down 68% on year, though gas and power forwards strengthen heading into the cooler months.

PJM West on-peak forward power prices for October averaged $40.64/MWh in September trading, 6% higher on month and down about 62% on year, according to Platts M2MS data.

Forward power at the hub for November averaged $41.90/MWh, mostly flat on month and down 62% on year, and forward power for December averaged $53.60/MWh, which was higher than recent averages but down considerably from $119.77/MWh in December 2022.

On-peak forward power prices at the AEP Dayton Hub and Northern Illinois Hub followed a similar trend with power forwards down between 56% and 65% on year.

Platts Transco Zone 6 Non-New York forward gas prices were down more steeply than power prices on year. Forward gas prices for October averaged $1.17/MMBtu in September trading, a decrease of about 81% from a year ago. Forward gas for November averaged $2.11/MMBtu, down about 71% on year, and forward gas for December averaged $4.57/MMBtu in September trading, down about 58% from an average of $10.89/MMBtu a year ago.

"Average delivered gas prices in September continued to stay low, at around $1.50/MMBtu reflecting a well-supplied gas market. However, heading into the winter, gas prices are expected climb to $3.50/MMBtu in December owing to a rapidly tightening market," S&P Global Commodity Insights power market analysts said in a recent research note.

"As a result, on-peak power prices at the PJM Western Hub are expected to climb from $37.60/MWh in September to $61.50/MWh by January 2024," the analysts said.

Power generation fuel mix

Depressed gas prices and declines in coal-fired generation have continued to support a strong gas burn in PJM, according to the research note.

In September, natural gas-fired generation rose 6% on year and 10% year-to-date over the same period in 2022.

Most of the natural gas gains have come at the expense of coal in PJM, and year-to-date, coal generation was down about 29% after another 7% decline in September, the analysts said.

Coal-fired power accounted for 13.9% of the PJM fuel mix in September, down from 17.1% in August and 15.8% in September 2022, according to ISO data.

Gas-fired power accounted for 46.2% of the power generation mix in September, relatively unchanged from 46.3% in August and down from 44.4% in September 2022.

Nuclear power supplied 33.3% of the PJM fuel mix, up from 29.8% in August and 33% in September 2022.

The fuel mix was rounded out by hydropower, wind power, non-wind renewables and other sources.

Spot power, gas price dynamics

PJM West Hub on-peak day-ahead power prices averaged $37.78/MWh in September, down about 60% from an average of $94.29/MWh in September 2022. On-peak day-ahead power prices at the hub were up by 6.6% on month.

Electricity demand continues to trend below 2022 levels, and through September, total electricity demand is trending 3.5% lower than last year, largely attributable to mild weather, the S&P Global analysts said.

The RTO is expected to end the year at around 2.8% below last year, the analysts said.

PJM peakload averaged 104,239 MW in September, down 13% from the August average of 120,082 MW, according to ISO data.