MISO TRACKER: October prices, December forwards up with gas

Stronger natural gas prices caused wholesale power prices in the Midcontinent Independent System Operator market to surge in October, while December forwards showed similar strength.

Across the five MISO hubs included in this analysis, all of the day-ahead on-peak locational marginal prices averaged in the $60s/MWh, while the Indiana and Michigan hub prices were in the upper $60s/MWh, according to S&P Global Platts price data.

These prices were up by percentages ranging from around 23% for the Michigan Hub to more than 31% for the Minnesota Hub, in comparison with September averages in the high $40s/MWh to mid-$50s/MWh. October prices were up from October 2020 prices by percentages ranging from about 54% at the Texas Hub to more than 182% at the Minnesota Hub.

At the Chicago City-gates, spot gas averaged $5.261/MMBtu in October, up 9.7% from September's $4.797/MMBtu and up almost 153% from October 2020's $2.082/MMBtu.

At Henry Hub, spot gas averaged $5.478/MMBtu in October, up 9.2% from September's $5.024/MMBtu and up almost 140% from October 2020's $2.289/MMBtu.

Forward markets

December forwards were also stronger, mirroring strength in gas prices.

At the Indiana Hub, December on-peak power averaged about $68.35/MWh in October, up from its September average of $54.55/MWh and the $32.65/MWh that December 2020 packages averaged in October 2020.

At the Louisiana Hub, December on-peak power averaged about $67.40/MWh in October, up from its September average of $53.60/MWh and the $31.55/MWh that December 2020 packages averaged in October 2020.

Chicago City-gates December gas averaged $5.95/MMBtu in October, up from $5.497/MMBtu in September and up from the $3.253/MMBtu that December 2020 gas averaged in October 2020.

Henry Hub December gas averaged $5.719/MMBtu in October, up from $5.258/MMBtu in September and up from the $3.223/MMBtu that December 2020 gas averaged in October 2020.

Power burn

Despite the stronger natural gas price outlook, the power burn may be stronger in December both on the month and the year.

Based on S&P Global Platts Analytics' natural gas generation forecast for MISO in December, assuming a heat rate similar to December 2020, MISO's gas burn may approach 3.4 Bcf/day in December, up from October's 3.3 Bcf/d and December 2020's 3.1 Bcf/d.

Platts Analytics projections for average natural gas generation levels equates to 520.5 GWh/day to be generated by gas in December, up from October's 500.8 GWh/d and December 2020's 483.5 GWh/d.

The National Weather Service on Oct. 21 forecast enhanced chances for above-normal temperatures across almost all of the MISO footprint for November, December and January. Only most of Minnesota and MISO's footprints in Montana, North Dakota, South Dakota are forecast to have near-normal temperatures. The enhanced chances for above-normal temperatures range from about 33% to about 50% for most of the MISO footprint.

In October, the weather was relatively mild, with the population-weighted average combined heating- and cooling-degree days 66% larger than September but about 44% less than October 2020's numbers, according to CustomWeather data.

MISO's population-weighted average temperature in October was 58.4 degrees Fahrenheit, compared with September's 68.1 F and October 2020's 49.9 F.

Loads may have been more heavily influenced by the rebounding economy than the weather, as MISO's average daily peakload was about 78.1 GW, down 10.5% from September's 87.3 GW but up 5.8% from the pandemic-affected October 2020 average of 73.8 GW.

Generation mix

Therefore, heavier loads may have forced grid operators to dispatch gas-fired generation more often, which displaced some coal-fired generation.

Although the coal fleet retained its leading share, it fell to 36.5% from September's 43.5%, but this October's share was more than October 2020's 33.4%.

The gas fleet provided almost 32% of MISO's power in October, up from less than 27% in September but down from October 2020's 35.4%.

Nuclear power kept its third-place spot at 14.5% in October, barely edging out wind's 14.2%. Nuclear's share was 16.7% in September and 14.2% in October 2020. Wind's share was 9.9% in September and 14.9% in October 2020.