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Impending cold sends Northeast, Midwest dailies soaring

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Impending cold sends Northeast, Midwest dailies soaring

U.S. next-day power markets were slightly mixed Wednesday, Dec. 14, as elevated demand and cold weather outlooks boosted hubs in the Northeast and Midwest but a downtick in spot gas prices pressured dailies in Texas and the West.

Losing some ground the day prior, the front-month January 2017 natural gas futures contract rebounded Wednesday and closed the session up 6.6 cents to settle at $3.540/MMBtu. On the other hand, spot natural gas markets, with the exception of trades done in the Northeast, favored losses.

According to AccuWeather.com, "a double-barreled storm will soak California with rain and flash flooding while areas farther north are hit with more snow and ice into Friday."

Fundamental boost pushes East markets higher

An upcoming arctic cold front, increased heating demand and a rally in regional spot natural gas prices worked together to push power values in the East higher Wednesday.

Across next-day markets, power at NEPOOL-Mass traded in the mid-$80s to low $90s, rising from a Tuesday index of $75.50 while dailies at New York Zone G rose by roughly $20 and spanned the mid-$70s. Transactions at PJM West increased by more than $20 and changed hands in the low $60s to mid-$70s.

Day-ahead markets mirrored their next-day counterparts and jumped as well. DAMs at NEPOOL-Mass rose by more than $25 and averaged $96.59, while New York Zone A added more than $10 and averaged $41.25. DAMs at New York Zone G gained roughly $30 and averaged $85.85 while New York Zone J noted a daily premium of almost $40 and averaged $94.80.

Sizeable increases in spot natural gas prices helped encourage gains. Transco Zone 6 New York saw spot gas deals jump by more than $15 to average above $20.20/MMBtu while trades at TETCO-M3 gained almost $5 to average atop $8.70/MMBtu. Transactions at Algonquin Citygates rose by about $2.40 and averaged above $12.25/MMBtu

Grid operators forecast increased demand during the latter part of the workweek. Peak load in New England could rise by more 1,380 MW from Wednesday to near a Thursday high of 19,400 MW while demand in New York should crest at 22,596 MW on Thursday, climbing by almost 1,250 MW from the midweek. The PJM Mid-Atlantic region may see Thursday load reach 44,783 MW, up by more than 6,800 MW from Wednesday while demand in the PJM Western region could note a Thursday peak of 70,600 MW, 8,469 MW higher from the day prior.

PJM issued a Cold Weather Alert for the COMED, RMU, DAY, FE-AP, AEP, WESTERN, FE-ATSI, DUQ, DEOK regions from midnight ET on Dec. 15 to 11:59 PM ET on Dec. 16.

Midwest markets rise with load forecasts

Price activity in the Midwest favored gains Wednesday as robust load forecasts and cold weather outlooks countered a modest downtick in regional spot natural gas prices.

Power values at PJM AEP-Dayton and MISO Indiana rose by more than $10 from Tuesday and ranged in the mid-$50s and high $50s to low $60s, respectively.

Stronger demand may be in store for the region as demand in the PJM AEP region could touch a high near 22,466 MW on Thursday, up by more than 3,250 MW from Wednesday. Load in the PJM ComEd region is likely to surpass 16,500 MW on Thursday, increasing by more than 1,100 MW from the midweek.

West dailies deflate with cheap gas prices

Lower spot natural gas prices drove hubs in the West to embrace losses Wednesday but with higher load forecasts limiting the downside.

The California ISO is calling for Thursday demand to top out at 30,312 MW, up by nearly 130 MW from Wednesday. However, on-peak deals at South Path-15 weren't impressed and fell by about $5 in the high $30s to low $40s.

Losses of $4 to $5 were noted in the Northwest with Mid-Columbia and COB deals ranging in the low to mid-$40s. Southwest markets also ticked lower with Palo Verde easing in the high $20s, while Mead trades shed roughly a dollar and were heard in the low $30s.

Texas DAMs ease with gas losses

Day-ahead markets in Texas leaned mixed to marginally lower Wednesday as a downtick in spot natural gas prices counterbalanced forecasts of rising Thursday demand.

DAMs at ERCOT North, ERCOT South and ERCOT West eased from Tuesday and averaged $28.22, $28.43 and $27.95, respectively while DAMs deals at ERCOT Houston were flat to the day prior and averaged $28.56.

Demand in Texas could run up to 42,066 MW on Thursday, almost 900 MW higher from Wednesday

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.