PJM Tracker: power, gas prices remain significantly higher in November on year

PJM Interconnection wholesale power prices remained well over 150% higher in November on year, but decreased on a monthly basis at some locations, while forward power prices remained significantly higher on year.

PJM West Hub day-ahead on-peak power prices averaged $69.45/MWh in November, a 200% increase from the November 2020 average of $23.01/MWh. Day-ahead on-peak power prices at the hub were 3.5% higher on month.

PJM West real-time on peak power prices averaged $74.14/MWh in November, an increase of 224% on year, and 12% higher on month.

Day-ahead on-peak Northern Illinois Hub power prices averaged $52.15/MWh in November, a 163% increase from year ago levels. However, day-ahead on-peak prices at the hub were 12.3% lower on month in November.

AEP-Dayton Hub day-ahead on-peak power prices averaged $64.41/MWh in November, a 187% increase on year, but 1.56% lower on month.

Texas Eastern spot natural gas prices were 258% higher on year in November to average $4.83/MMBtu and gas prices at the hub were 5.4% higher on month.

"Colder weather in the second half of the month contributed to pushing loads markedly higher, leading to absolute levels above 85 GW for the month, or in line with those of November 2019," S&P Global Platts Analytics said in a recent research note.

PJM peak load in November averaged 94,002 MW, a 6% increase from October's average of 88,947 MW, according to ISO data.

The average high temperature across PJM territory in November was 52.6 degrees Fahrenheit compared with an average high of 69.6 degrees F in October, according to CustomWeather data.

The average low temperature was 35.6 degrees F compared with 55.3 degrees F in October and this temperature change was reflected in heating degree days increasing to an average of 20.4 in November from 4.2 in October.

Power generation fuel mix

Coal and gas output has been virtually flat in November vs October, according to Platts Analytics.

"Most of the demand upside has been met by higher nuclear and wind output, resulting in coal generation of 14 aGW and gas generation of 35 aGW," the analysts said, adding that compared to last November, these figures represent a decline of 20% for coal but an increase of 26% for gas.

Coal accounted for 15.4% of the PJM power generation fuel mix in November, down from 15.6% in October and gas accounted for 40.3% of the November fuel mix compared with 41.5% in October.

Nuclear power accounted for 35% of the fuel mix, up from 34.7% in October and wind power accounted for 4.8% of the mix, up from 3.6% in October.

"Ongoing tightness in the coal supply chain, with prices pegged to some extent to seaborne contracts, will continue to offer downward pressure on coal burns in December, although a recovery is expected in the first quarter of 2022," Platts Analytics said.

Forward power, gas prices

PJM West Hub on-peak forward power prices for December averaged $73.12/MWh in November trading, which was $45.57/MWh, or about 165%, higher than year-ago levels, according to Platts M2MS data. On-peak forward power for January 2022 averaged $93.31/MWh and February 2022 averaged $87.36/MWh in November trading.

AEP-Dayton on-peak power prices for December averaged $68.97/MWh in November trading, a 157% increased from where the contracted traded in November 2020. The January contract averaged $84.35/MWh in November trading, 160% higher than year-ago levels.

December Platts Transco Zone 6 Non-New York on-peak forward gas prices averaged $6.46/MMBtu in November trading, 141% higher than a year ago, but 11% lower on month.

Forward gas prices at the hub peaked at $8.87/MMBtu for January 2022 and declined slightly to $8.61/MMBtu for February 2022 in November trading.

"Our price forecast remains at a small discount to market in 1Q 2022 across the different PJM hubs," Platts Analytics said.

"However, the discount widens for the balance of the year, as the shift towards gas dispatch on sustained coal prices finds PJM in a strong exporting position, with export capacity limiting the upside on power prices," the analysts said.