SOUTHEAST POWER TRACKER: Gas weakens electricity prices in November

Southeastern US wholesale power prices in November weakened in comparison with October, but remained more than double their November 2020 averages, mainly because of significantly stronger natural gas prices, and January forwards showed similar strength.

Day-ahead on-peak bilateral indexes averaged in the mid- to high $50s/MWh in November in every pricing region except Vacar, where the S&P Global Platts Bilateral index averaged in the low $60s/MWh. All of these pricing points had averages in the mid-$60s/MWh in October and in the mid-$20s/MWh in November 2020.

At the Transco Zone 4 pipeline, which is important for Into Southern power bilaterals, spot gas averaged $5.047/MMBtu in November, down from October's $5.464/MMBtu but more than double November 2020's $2.507/MMBtu.

At the Florida Gas Zone 3 price point, spot gas averaged $5.064/MMBtu in November, down from October's $5.617/MMBtu but up 95% from November 2020's $2.594/MMBtu.

Power demand also contributed to year-on-year power price strength in most of the Southeast. In the North American Electric Reliability Corporation's SERC Region, formerly known as the Southeast Electric Reliability Council, load levels averaged 72.4 GW in November, up from October's 70.3 GW and November 2020's 66.9 GW, according to S&P Global Platts Analytics.

NERC's Florida Reliability Coordinating Council was an exception to the load-growth scenario, as load levels averaged less than 23.1 GW in November, down from October's 29.5 GW and November 2020's 25.1 GW.

Milder weather in Florida, compared with the rest of the Southeast, likely accounted for the difference in load trends.

Combined heating- and cooling-degree days in Florida had a population-weighted average in November that was 46.6% less than October and 26.8% less than in November 2020, according to CustomWeather data. Florida's population-weighted average temperature was 66.1 degrees Fahrenheit in November, down from October's 77.2 degrees F and November 2020's 72.9 degrees F.

In contrast, North Carolina's combined HDDs and CDDs had a population-weighted average in November that was more than triple's October's average and almost 73% higher than in November 2020. North Carolina's population-weighted average temperature was 48.7 degrees F in November, down from October's 66 degrees F and November 2020's 56.2 degrees F.

Georgia had population-weighted average combined HDDs and CDDs in November that was more than double October's total and more than 58% higher than in November 2020. Georgia's population-weighted average temperature was 48.7 degrees F in November, down from October's 66.8 degrees F and November 2020's 58.7 degrees F.

Forward markets

Looking to the new year, the National Weather Service forecasts high chances for above-normal temperatures throughout the Southeast from December through January, which may play a factor in the January forwards weakening month to month, albeit remaining at higher levels than comparable January 2020 forwards.

The National Weather Service forecast indicates chances ranging from 50% to 70% for above-normal temperatures throughout the Southeast.

Into Southern on-peak January 2022 packages averaged less than $71.10/MWh in November, down from October's average of about $74.15/MWh, but substantially higher than the $31.45/MWh that January 2021 packages averaged in November 2020.

Florida Power on-peak January 2022 forwards averaged about $69.70/MWh in November, down from November's average of less than $74.40/MWh, but more than double the $31.20/MWh that January 2021 power averaged in November 2020.

Transco Zone 4 January gas averaged $5.272/MMBtu in November, down from October's $5.90/MMBtu, but up from the $2.927/MMBtu that January 2021 gas averaged in November 2020.

Florida Gas Zone 3 January gas averaged $5.31/MMBtu in November, down from October's $5.939/MMBtu, but up from the $2.982/MMBtu that January 2021 gas averaged in November 2020.

Generation mix

The month-to-month decrease in gas prices helped gas-fired generation retain a leading share of electricity produced in both the SERC and FRCC footprints.

In SERC, gas' share was flat, month to month, at 37.6%, but up from 34.1% in November 2020, when nuclear generation had the leading share of 34.5%.

Nuclear power's share of SERC generation was also flat, month, to month, at 32.1%,

The SERC coal fleet's share increased both on the month and the year, averaging 21.2% in November, compared with 18.5% in October and 19.3% in November 2020.

In FRCC, the gas fleet provided 73.3% of the region's energy, down from October's 74.2%, but up from November 2020's 71%.

Nuclear power's 14.3% share was up both on the month and year. Nuclear power produced 11.1% of FRCC power in October and 13.9% in November 2020.

The FRCC coal fleet's share continued to fall in November with an average of 6.5% of energy generated, down from October's 9.1% and November 2020's 10.5%.