SOUTHEAST POWER TRACKER: Power dailies, forwards up with natural gas

Wholesale on-peak power indexes jumped sharply on the month and year in the US Southeast in April, driven primarily by stronger natural gas prices, and June on-peak power forwards followed a similar pattern, as the Russia-Ukraine conflict's repercussions continue to reverberate through the energy complex.

Platts' day-ahead on-peak bilateral assessments, as reported by S&P Global Commodity Insights, averaged in the high $70s/MWh across four geographically dispersed pricing points in the Southeast, and averaged more than $80/MWh in the transmission constrained Florida power market.

These latest indexes were up from the high $40s/MWh in March and indexes ranging from $28.50/MWh to $30.78/MWh in April 2021.

Spot gas averaged $6.434/MMBtu in April at the Transco Zone 4 pipeline, S&P Global data shows, up from March's $4.812/MMBtu and April 2021's $2.56/MMBtu. At the Florida Gas Zone 3 price point, spot gas averaged $6.465/MMBtu in April, up from March's $4.861/MMBtu and April 2021's $2.601/MMBtu.

Power demand likely had little effect on prices in April, according to data collected by S&P Global from the US Energy Information Administration. For example, in the North American Electric Reliability Corporation's SERC region, formerly known as the Southeast Electric Reliability Council, loads averaged 66.8 GW in April, down from March's 69.3 GW but up from April 2021's 65.8 GW. In NERC's Florida Reliability Coordinating Council region, loads averaged 26.8 GW, up from March's 25.7 GW and April 2021's 24.9 GW.

The weather's power demand tendencies were mixed, with population-weighted average daily temperatures generally more moderate in April than they were in March or in April 2021, according to CustomWeather data. For example, temperatures averaged 62.7 degrees Fahrenheit in Georgia in April, up from March's 57.6 degrees and April 2021's 62.3 degrees.

Combined heating- and cooling-degree days in Georgia in April were down almost 38% from March and down more than 14.2% from April 2021.

In contrast, Florida's population-weighted average combined HDDs and CDDs were in April were up 18.9% from March and up 9.2% from April 2021. Temperatures averaged 73.9 degrees F in April, up from March's 70.7 degrees F and April 2021's 72.2 degrees F.

Forward markets

Looking forward, the National Weather Service's April 21 forecast for May, June and July indicates probabilities for above-normal temperatures ranging from 33% to 50% for the Southeast.

Such a forecast may provide a reinforcing boost for June forwards, which were up strongly on the month and year, likely related to the continuing conflict between Russia and Ukraine, consequently tight gas supply conditions in Europe and heavy demand for feed-gas from coastal LNG liquefaction facilities.

Into Southern June on-peak forwards averaged almost $78.40/MWh in April, up 42.3% from $55.05/MWh in March and up almost 156% from the $30.64/MWh that June 2021 forwards averaged in April 2021, S&P Global pricing data shows.

Florida June on-peak forwards averaged more than $75.20/MWh in April, up 32.5% from March's $56.75/MWh and up 130.6% from the $32.60/MWh that June 2021 forwards averaged in April 2021.

Transco Zone 4 June gas averaged $6.759/MMBtu in April, up 34.4% from March's $5.028/MMBtu and up 150.3% from the $2.70/MMBtu that June 2021 gas averaged in April 2021.

Florida Gas Zone 3 June forwards averaged $6.85/MMBtu in April, up 32.9% from March's $5.155/MMBtu and up almost 143.7% from the $2.811/MMBtu that June 2021 gas averaged in April 2021.

Generation mix

April's high gas prices and relatively weak demand likely contributed to nuclear and coal-fired generation regaining some market share, according to EIA data collected by S&P Global.

In fact, nuclear power regained the lead share from gas-fired generation in NERC's SERC region. Nuclear power's share was 33.5% in April, up from March's $31.4% but down from April 2021's 34.5%.

The SERC coal fleet's share rose to 22% in April from March's 21.4% and April 2021's 21.3%.

In contrast, the SERC gas fleet's share fell to 32.8% in April from March's 33.3% and April 2021's 33.5%.

Gas-fired generation, which normally dominates NERC's FRCC region, also lost some share, falling to less than 69% in April from March's 73.4% and April 2021's 6.8%.

FRCC's nuclear fleet had a 12.3% share in April, down from March's 12.8% but up from April 2021's 11.6%.

The FRCC coal fleet supplied 10.2% of the region's power in April, flat with April 2021 but up from 6.6% this March.

Solar power's share in the Sunshine State also grew in April, up to 6.2% in April from March's 5.3% and April 2021's 5.2%.