US POWER TRACKER: Southeast power prices ease on month, still in triple digits

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Day-ahead on-peak bilateral power indexes weakened from July to August in the Southeast but remained in triple digits and more than double August 2021 prices, as substantially stronger natural gas prices overpowered lighter loads and relatively mild weather. October forwards followed a similar pattern.

Power indexes average from the upper $110s/MWh to the lower $120s/MWh in August, down from averages at or above $130/MWh in July but more than double the Aug. 20 averages around $50/MWh, according to S&P Global Commodity Insights' price database.

At the Transco Zone 4 pipeline, which is important for the Into Southern bilateral index, spot gas averaged $9.714/MMBtu in August, down 4.3% from July's $10.145/MMBtu but almost 140% higher than August 2021's average of $4.052/MMBtu.

At the Florida Gas Zone 3 pipeline, important for Florida power indexes, spot gas averaged $9.845/MMBtu in August, down about 7.7% from July's average of $10.664/MMBtu, but up almost 140% from August 2021's average of $4.107/MMBtu.

Generation mix

Despite high gas prices, gas-fired generation's share of generation rose across the Southeast, providing 40.4% of the total in the North American Electric Reliability Corporation's SERC Region, formerly known as the Southeast Electric Reliability Council, up from July's 40.1% and 36.8% in August 2021, according to S&P Global data.

Nuclear power's share was also up on the month and year in SERC, averaging 29.6% in August, compared with July's 27.2% and August 2021's 27.7%. Coming in third place was coal-fired generation, averaging less than 22% in August, down from July's 24.7% and August 2021's 28.2%.

In NERC's Florida Reliability Coordination Council footprint, gas-fired generation supplied 76.7% of the total, up from 73.8% in July and 73.7% in August 2021. Nuclear units supplied 11% of the August total, down from July's 11.8% but up from August 2021's 10.7%. Coal came in third place with 6.6% of the August total, down from 7.9% in July and 11.2% in August 2021.

Load levels in the SERC region averaged lower in August both on the month and the year, but loads were heavier in FRCC.

In SERC, loads averaged 88.4 GW in August, according to S&P Global data, down 4.4% from July's $92.5 GW and down 3.2% from August 2021's 91.4 GW. These 2022 numbers are actual through Aug. 30, modeled thereafter.

In FRCC, loads averaged 36 GW in August, up 8.7% from July's 33.1 GW and up 5.7% from August 2021's 34.1 GW.

Milder weather

Most weather was milder in August, compared with this July and August 2021, according to CustomWeather data.

For example, Georgia's population-weighted average cooling-degree days in August were 15.8% fewer than July's and 4.9% fewer than in August 2021. North Carolina's population-weighted CDDs in August were 17.2% fewer than July and 8.4% fewer than in August 2021.

Florida's population-weighted average CDDs in August were 1.5% fewer than July's but 1.4% more than in August 2021.

Florida's population-weighted average temperature in August, at 83.7 F, was 0.2% lower than July's 83.9 F and 0.2% higher than August 2921's 83.5 F.

Georgia's population-weighted average temperature in August was 78.7 F, down 3.1% from July's 81.2 F and down 0.9% from August 2021's 79.4 F.

North Carolina's population-weighted average temperature in August was 78.8 F, down 3.4% from July's 81.6 F and down 1.5% from August 2021's 80 F.

Forward markets

That National Weather Service on Aug. 18 forecast enhanced chances for above-normal temperatures across the Southeast for September, October and November, with probabilities ranging from 40% to 50%.

In combination with higher natural gas forwards, the weather forecast may have contributed to power forward strength for October.

Into Southern October on-peak power packages averaged about $100.50/MWh in October, up from less than $88.40/MWh in July and more than double the $40.50/MWh that October 2021 packages averaged in August 2021.

Florida October on-peak power packages averaged about $95.25/MWh in August, up from about $84.40/MWh in July and more than double the $42.10/MWh that October 2021 packages averaged in August 2021.

Transco Zone 4 October gas averaged $9.184/MMBtu in August, up 16.6% from July's average of $7.879/MMBtu and 129.3% higher than the $4.005/MMBtu that October 2021 gas averaged in August 2021.

Florida Gas Zone 3 October gas averaged $9.407/MMBtu in August, up almost 12% from July's average of $8.402/MMBtu and up by more than 129% from the $4.107/MMBtu that October 2021 gas averaged in August 2021.