ISO-NE TRACKER: February power, gas prices decline from colder January spikes

ISO New England power prices at major hubs declined around 20% on month in February as regional natural gas prices decreased nearly 27% after a cold January increased power and gas demand. Power and gas prices remain considerably higher than year-ago levels.

ISO-NE Internal Hub day-ahead on-peak power prices decreased by $33.31/MWh or about 21% on month in February to average 123.11/MWh. Day-ahead on-peak prices at the hub were 58% higher than year-ago levels when the price averaged $77.84/MWh for the month.

Internal Hub real-time off-peak power prices averaged $115.51/MWh in February, a 24% decline from January and about 70% higher than the February 2021 average.

Boston Hub day-ahead on-peak power prices averaged $125.21/MWh in February, a 20% decline from the January average of $156.84/MWh. Day-ahead on-peak power prices at the hub were 60% lower in February 2022 than a year ago.

Platts Algonquin city-gates spot natural gas prices by S&P Global Commodity Insights averaged $14.56/MMBtu in February, declining 27% from the January average of $20.00/MMBtu -- the highest monthly average price in recent years. The average February spot price up 74% from the $8.37/MMBtu averaged a year ago.

"In January, cold temperatures drove an increase of 6% in raw loads year on year across ISO-NE," S&P Global analysts said in a recent research note. "But with temperatures 2 degrees Fahrenheit above normal in February, raw loads have remained virtually flat year on year."

Unlike January, when temperatures remained below average for most of the month, February saw large temperature fluctuations with a mid-month cold front and a late-month winter storm, but also some days considerably warmer than normal, according to S&P Global analysis.

ISO-NE peak load averaged 16,514 MW in February, a 6.1% decline from the January average of 17,590, according to ISO data.

The February average low temperature in ISO-NE territory was 23.8 degrees F, 34% higher than the January average low of 17.8 degrees F, according to CustomWeather data. The normal low for February is 22.4 degrees F.

The higher temperatures reduced heating degree days from a January average of 39.7 to 33.1 in February.

Power generation fuel mix

Oil-fired power generation saw the largest month-on-month decline in February, accounting for 2.2% of the fuel mix compared with 10.9% in January, according to ISO data.

With gas prices lower in February, gas-fired power generation increased, accounting for 46.9% of the fuel mix compared with 43.5% in January.

Nuclear power accounted for 29.1% of the February generation fuel mix, up from 26% in January.

Renewable generation also increased in February, with hydropower accounting for 7.3% of the fuel mix compared with 6.3% in January. Solar accounted for 2.1%, up from 1.4% and wind power accounted for 5.3% of the fuel mix, up from 4.4% in January.

Forward power, gas prices

Mass Hub on-peak forward power prices decreased slightly on month in February trading, with the March contract averaging $88.39/MWh, a 5% decline on month, but still about 100% higher than where the package traded a year ago, according to Platts M2MS data.

Mass Hub on-peak power for April averaged $54.40/MWh in February trading, a 2.6% monthly decline and 61% higher on year. The May contract increased slightly on month to average $45.50/MWh in February trading which was also 69% higher on year.

Forward Algonquin city-gates gas prices for March averaged $9.74/MMBtu in February trading, roughly flat on month and 115% higher than a year ago. The April contract averaged $4.88/MMBtu, 3.4% higher on month and 52% higher on year, while the May contract averaged 3.84/MMBtu, about 8% higher on month and 59% higher on year.

"We anticipate ISO-NE on-peak power prices to decline through the first months of 2022, from $160/MWh in January to $37/MWh in May, tracking our unchanged view of a price drop at Algonquin CG hub, where prices go from $20/MMBtu down to $3.67/MMBtu over the same period," S&P Global analysts said.

"Contributing to the price drop, demand is expected to decline 19% between January and May on a weather-adjusted basis," the analysts said.