Wholesale spot power prices climbed over 35% year over year in the US Pacific Northwest as temperatures dropped at the end of October causing heating demand to climb as hydropower generation, it's main resource for electricity, remains lower than normal.
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Meanwhile, California prices dropped over 10% from a year ago, despite higher natural gas prices, on milder weather and more renewable generation output, including hydro.
Although hydro remains the main fuel source at an average of nearly 63% of the total fuel mix in October, it was down 3.5 percentage points compared to a last year, according to Bonneville Power Administrator data.
"With much of the northwest experiencing drought in July and August, reservoirs have begun to evaporate," S&P Global Commodity Insights said in its latest North American Electricity Short-term Outlook.
That has caused more demand for thermal and nuclear generation to fill in the gap. Both thermal and nuclear generation averaged nearly 16% of the October fuel mix, each up about 3 points, according to BPA data.
October peakload averaged 6.723 GW, an increase of 6.5% compared to last October, according to BPA data. Peakload ranged from 5.9 GW to 8.684 GW. Population-weighted average temperature were 13% lower month on month and 6% lower than a year ago, according to CustomWeather data. The colder temperatures led to 48% more heating degree days year on year.
As the cold snap hit in late October, Mid-C on-peak day-ahead prices swung over $200 in a matter of a few days - from $36.64/MWh Oct. 23 to $275.83/MWh Oct. 26, according to Platts assessments, published by S&P Global.
"Mid-Columbia monthly was boosted by very high prices late in the month due to much colder than normal conditions combined with conservative reservoir operation ahead of the heating season and transmission outages," said Morris Greenberg, senior manager with the low-carbon electricity team at S&P Global Commodity Insights. "The latter kept a lid on California prices but even so, pricing and implied heat rates at SP15 were uncommonly weak for a fall shoulder month."
SP15 on-peak day-ahead locational marginal prices averaged $51.71/MWh in October, 17.8% lower year on year, according to CAISO data.
SoCal city-gate spot gas prices more than doubled month on month as El Paso Natural Gas Company declared force majeure on line 1104 which limited flows to the region. SoCal prices averaged $7.109/MMBtu in October, an 88% jump month on month and 15% higher year on year, according to pricing data from Platts. Prices ranged from $3.865/MMBtu early in the month to $11.850/MMBtu by mid-month.
"The California Public Utilities Commission has authorized the increase of the Aliso Canyon gas storage facility's capacity from 41 Bcf to 68 Bcf in a bid to avoid price spikes and bolster reliability for the winter," S&P Global said in its North American Electricity Short-term Outlook.
CAISO hydro generation remained strong, averaging 8.2% of the total October fuel mix, nearly 4 points higher than a year ago. At the same time, solar was up 3.2 points to averaged 19.1%, while wind was up nearly 1 point to average 7.3% of the mix, according to CAISO data. And with less hydro generation available from the Northwest, CAISO imports averaged less than 10% of the mix, down over 7 points year on year.
Power forwards rebounded in October, following gas forwards.
Mid-C on-peak November rolled off the curve at $85.45/MWh, 22% higher than where its 2022 counterpart ended, according to Platts data. The on-peak December package is currently in the low $130s/MWh, 21.2% above where the 2022 package was a year ago, while the January package is in the upper $120s/MWh, nearly 4% higher.
Sumas November rolled off at $6.244/MMBtu, 2.4% above its 2022 counterpart, according to Platts data. The December contract is currently around $9.540/MMBtu, 8.2% higher than where the 2022 contract was a year ago, while January is around $9.684/MMBtu, 6.8% higher.
The three-month outlook indicates a greater probability for above-normal temperatures across the Western US, with above-normal precipitation possible in California, according to the National Weather Services' Climate Prediction Center.