SOUTHEAST POWER TRACKER: Electricity prices up on gas strength, weather

Southeastern US on-peak bilateral indices more than doubled on the year in January and were significantly higher than December, mainly because of stronger natural gas prices and some weather influences. March forwards showed mixed results, month-to-month, but were up in comparison with March 2021 forwards in January 2021.

The January averages of S&P Global Platts assessments for day-ahead on-peak power in the region were in the high $50s/MWh to low $60s/MWh, compared with the mid-$20s/MWh for most of the Southeast in January 2021 and with the low $40s/MWh in December.

At the Transco Zone 4 pipeline, which is important for Into Southern power prices, spot gas averaged $4.314/MMBtu in January, up 65% from January 2021's $2.614/MMBtu and up 16.9% from December's $3.692/MMBtu, according to Platts data.

At the Florida Gas Zone 3 pipeline, which is important for Florida power bilateral indices, spot gas averaged $4.377/MMBtu in January, up 66.3% from January 2021's $2.632/MMBtu and up 16.5% from December's $3.756/MMBtu.

The weather was significantly harsher throughout the region in January, compared with December and January 2021, according to CustomWeather data.

Population-weighted average total heating- and cooling-degree days in Georgia were 130.5% higher in January than in December and 17.1% higher than January 2021. The state had a population-weighted average temperature of 43.8 degrees Fahrenheit in January, down 21.7% from December's 55.9 degrees F and January 2021's 46.4 degrees F.

Florida's population-weighted average total heating- and cooling-degree days in January were 35.8% more than in December and 27.5% higher than in January 2021.

The weather likely contributed to heavier around-the-clock loads in the North American Electric Reliability Corporation's Florida Reliability Coordinating Council, which averaged 25.2 GW in January, up 6.3% from December's 23.7 GW and 7.6% higher than January 2021's 23.4 GW.

In NERC's SERC region, formerly known as the Southeast Electric Reliability Council, loads averaged 78.8 GW in January, up 9.6% from December's 71.9 GW but down 3% from January 2021's 81.3 GW.

Forward markets

Loads may be trending downward in March, as the National Weather Service's official forecast for February, March and April indicates enhanced chances – 33% to 50% -- for above-normal temperatures throughout the Southeast. The forecast was issued Jan. 20.

March power forwards in January were up strongly on the year but mixed on month, likely reflecting conflicting weather and gas fundamentals.

Into Southern March power averaged about $47/MWh in January, up 1.5% from December's $46.30/MWh and up 66.3% from the $28.25/MWh that March 2021 power averaged in January 2021.

Florida's March power forwards averaged $44.40/MWh in January, down 4.3% from December's $46.40/MWh but up almost 49% from the $29.80/MWh that March 2021 power averaged in January 2021.

Transco Zone 4 March gas averaged $3.997/MMBtu in January, up 8.4% from December's $3.689/MMBtu and up 54.4% from the $2.588/MMBtu that the March 2021 gas forwards averaged in January 2021.

Florida Gas Zone 3 March gas averaged $4.098/MMBtu in January, up 7.6% from December's $3.808/MMBtu and up 55.1% from the $2.642/MMBtu that the March 2021 gas forwards averaged in January 2021.

Generation mix

Despite strong spot gas prices, the Southeast's gas-fired generation fleet had no problem retaining its leading share in supplying local power in January, according to S&P Global Platts Analytics data.

In the SERC region, gas plants supplied 33.3% of the energy in January, down from 38.4% in December and 35.3% in January 2021.

In the FRCC region, gas plants supplied 72.3% of the energy in January, down from 72.5% in December but up from 64.5% in January 2021.

Nuclear power held onto the No. 2 spot in both regions.

In SERC, nuclear plants provided 32.7% of the energy in January, down from 35.3% in December and 32.8% in January 2021.

In FRCC, nuclear plants provided 14.5% of the energy in January, down from 16.3% in December and 16.6% in January 2021.

Coal-fired generation's share increased January in SERC, both in comparison with December and January 2021, but its share in FRCC was up on the month and down on the year.

Coal plants supplied 23.7% of SERC's power in January, up from December's 17.4% and January 2021's 23.6%.

Coal plants supplied 5.8% of FRCC's power in January, up from December's 5.4% but down from January 2021's 12.5%.

Solar power's growth in FRCC hit a 5.1% share in January, up from 3.7% in December and 3.1% in January 2021. Platts Analytics does not break out solar data for the SERC region.