ISO NEW ENGLAND TRACKER: Power and gas spot, forwards up sharply on year

ISO New England wholesale power prices at major hubs increased by more than 120% year on year in October as natural gas prices rose by similar levels and Mass Hub forward power prices pushed above $180/MWh in October trading.

ISO-NE Internal Hub day-ahead on-peak locational marginal power prices averaged $62.43/MWh in October, about $35/MWh or 127% higher year on year, and day-ahead on-peak prices at the hub rose by $10.88/MWh or about 21% from September.

Internal Hub day-ahead off-peak power prices averaged $48.28/MWh in October, which was $28.98/MWh or about 150% higher than the October 2020 average price.

Boston Hub power prices increased by similar levels, with day-ahead on-peak averaging $63.43/MWh in October, which was $35.58/MWh or about 128% higher year on year, and $10.70/MWh or about 20% higher on the month.

Boston Hub day-ahead off-peak power prices averaged $48.81/MWh or about 152% higher year on year in October.

Connecticut Hub day-ahead on-peak power prices were 35.48/MWh or 128% higher on the year in October to average $61.46/MWh. Prices at the hub were about $11/MWh or 22% higher month on month.

With the region heavily reliant on natural gas-fired power, wholesale electricity prices were driven up by October gas prices that averaged $4.78/MMBtu, about 139% or $2.78/MMBtu higher than year-ago levels.

"Winter continues to trade at a premium to our forecast for both power and gas," S&P Global Platts Analytics said in a recent research report.

"Our power price forecast for Mass Hub nears $110/MWh in January 2022, reflecting a deep discount from the near $180/MWh on-peak forward contract at $22/MMBtu AGT," the analysts said.

Wholesale power prices increased in October despite an 11% weather-related drop in average peak load, which averaged 13,914 MW compared with 15,701 MW in September, based on ISO data.

Electric cooling demand subsided with the October high temperature across the ISO-NE footprint averaging 64.6 degrees Fahrenheit compared with an average September high of 73.7 F, according to CustomWeather data.

Accordingly, cooling degree days decreased from an average of 2.88 in September to an October average of 0.15, while heating degree days increased from 0.87 in September to 6.21 in October.

Power generation fuel mix

Gas-fired power generation accounted for 65.5% of the ISO-NE fuel mix in October, up from 55.1% in September and 57.2% in October 2020.

ISO-NE's gas fleet consumed about 1.13 Bcf/d in October, up 3.4% from September and up 39% from October 2020. Assuming a similar heat rate to December 2020, ISO-NE's gas fleet would consume about 3.26 Bcf/d in December 2021, which would be about 23% lower year on year, according to Platts Analytics data.

Nuclear power, the next largest resource, accounted for 14.5% of the fuel mix in October, down from 27.8% in September and 22.7% in October 2020.

Hydropower increased in October to average 6.8% of the fuel mix, up from 5.5% in September and virtually unchanged from 6.7% a year ago.

Solar power accounted for 2.9% of the generation mix, roughly the same as the September average of 3.0% and up from 2.1% in October 2020.

Wind power accounted for 3.5% of the October fuel mix, up from 3.0% the previous month but down from 4.2% in October 2020.

"We continue to factor in incremental wind/solar builds planned for 2022, though note they are relatively small changes to overall balances," Platts Analytics said.

Forward power, gas prices

On-peak Mass Hub forward power prices were up significantly year on year in October trading with November averaging $83/20MWh, which is $45.22/MWh or 119% higher than October 2020, according to Platts M2MS data.

The trend continued into the winter months with on-peak December averaging $140.93/MWh, or 172% higher on the year, and January 2022 averaging $181.84/MWh or 186% higher than October 2020.

Forward power prices for those months were between 10% and 16% higher month on month.

A similar trend was observed with gas prices as well. The November Algonquin city-gates price averaged $8.25/MMBtu, or 132% higher year on year in October trading.

The December contract averaged $16.52/MMBtu, or 196% higher on year, and the January 2022 contract averaged $22.17/MMBtu, or 216% higher year on year in October trading.

Platts Analytics' gas price forecast of $16/MMBtu is "well back from forwards," and the on-peak implied heat rate for January below 7,000 Btu/kWh "suggests that more coal- and oil-fired generation should be "in the money" at near $20/MMBtu gas.