Heat dome keeps loads heavy in central US power markets, but relief is in sight

A persistent heat dome centered on the Lower Mississippi River Valley continued to challenge power grids in the region on Aug. 19, but forecast cooler temperatures have weakened energy prices for delivery on Aug. 20 and thereafter.

The National Weather Service had "extreme heat warnings" in effect along the Mississippi from southern Missouri to central Louisiana, incorporating most of Arkansas, northern Louisiana, western Mississippi and northeast Texas. Heat advisories were issued for areas ranging from southern Illinois and Indiana in the north to New Orleans in the south and from Alabama, Kentucky and Tennessee on the east to Oklahoma City and Dallas in the west.

CustomWeather forecast Midcontinent Independent System Operator population-weighted temperatures to average 1.4 degrees F, or about 1.9%, above normal for Aug. 20, the Electric Reliability Council of Texas average to be 1.2 degrees F, or 1.4%, above normal, and the Southwest Power Pool to average 0.5 degrees, or 0.6%, above normal.

However, temperatures are expected to drop below normal in ERCOT and SPP on Aug. 21 and to do the same in MISO starting Aug. 23.

SPP issued a conservative operations advisory effective noon to 7 pm CT Aug. 19 "due to forced (unplanned) outages, high load, uncertainty in variable energy resource forecasts, and elevated temperatures across the SPP territory."

"A resource advisory also remains in effect for the entire SPP [Balancing Authority] area through Aug. 19, at 10 pm CT," SPP said. "Resource advisories do not require the public to conserve energy."

SPP's load peaked at 53.3 GW on Aug. 18 and was forecast to peak at 52.3 GW on Aug. 19, the two highest peaks so far this August. The system's peakloads averaged 48.3 GW Aug. 1-17. SPP forecast loads on Aug. 20 to peak at 51.2 GW.

Markets trend lower

On the Intercontinental Exchange, SPP South Hub day-ahead on-peak power traded around $49/MWh on Aug. 19 for delivery on Aug. 20, down by more than $10 from SPP South Hub's day-ahead on-peak locational marginal price of $59.46/MWh for delivery on Aug. 19.

A 17.5-cent drop in Panhandle Texas-Oklahoma gas price to $2.475/MMBtu for Aug. 20 delivery from Platts' assessed $2.26/MMBtu for Aug. 19 delivery likely contributed to weaker power pricing.

MISO's load peaked at 111.7 GW on Aug. 18 and was forecast to peak at 113.3 GW on Aug. 19, about 10 GW and 11 GW higher, respectively for the 2020-24 averages for those dates. However, heat waves have built up MISO loads throughout August, hitting a peak of 117.8 GW on Aug. 8. MISO forecasts loads to peak at 107.4 GW on Aug. 20.

On the Intercontinental Exchange, MISO's most liquid Indiana Hub had Aug. 20 on-peak power traded around $50/MWh for Aug. 20 delivery, down by more than $14 from Aug. 19's day-ahead on-peak LMP of $64.39/MWh.

Platts assessed Chicago city-gates gas around $2.625/MMBtu for Aug. 20 delivery, down from $2.705/MMBtu for Aug. 19.

ERCOT's load peaked at 83.9 GW and was forecast to peak at 82.6 GW on Aug. 19, well above the 2020-24 averages of 73 GW and 74.6 GW, respectively, for those dates. ERCOT forecast load to approach 82.7 GW on Aug. 20.

On the Intercontinental Exchange, ERCOT North Hub day-ahead on-peak power traded around $61 for Aug. 20 delivery, down $44 from Aug. 19's $105/MWh.

Platts assessed Houston Ship Channel was at $2.58/MMBtu for Aug. 20 delivery, down 13.5 cents from Aug. 19's $2.715/MMBtu.