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Divergent trends in September lead US power markets to similar outcomes

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Divergent trends in September lead US power markets to similar outcomes

Electricity demand and natural gas prices were the majordrivers of power prices in September, as U.S. power prices were mixed andgeneration margins were in line with year-ago levels.

Average day-ahead market on-peak power prices in the U.S. averaged$33.56/MWh, up 0.4% versus the prior year. The New York ISO saw the largestdrop in DAM on-peak power prices, as they fell 12.5% to $31.98/MWh versus theyear-ago month on lower natural gas prices and falling electricity demand.Meanwhile, natural gas prices and demand headed the opposite direction in ERCOTto drive power prices 12.7% higher year over year to $33.08/MWh.

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In the New York ISO, average load was down 3.1% and peakload was down 4.6% year over year, while ERCOT saw average load climb 2.6% overthe same period and peak load jump 3.8% to 66,887 MW.

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Meanwhile, natural gas prices serving the New York ISOaveraged $2.461/MMBtu, down 12.5% year over year, as those serving all U.S.markets climbed 3.3% to $2.735/MMBtu. ERCOT saw natural gas prices jump 12.4%to $2.908/MMBtu.

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Despite widely diverging trends, ERCOT and NYISO saw naturalgas-fired implied heat rates — the efficiency rate at which the market cost ofpower equals the cost of burning natural gas to generate power — that werenearly flat to the year-ago period.

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Meanwhile, diverging domestic thermal coal price trendsdrove changes in coal-fired implied heat rates. During September, prompt-monthCentral Appalachian barge-delivered coal prices climbed 4% during the month to$41.88/ton, while the region's rail-delivered coal prices jumped 21.7% over thesame period to $56/ton on strengthening seaborne coal prices. September averageprices for barge-delivered coal were down 3% year over year while those ofrail-delivered coal jumped 17.6% over the same period. Around-the-clock,day-ahead market power prices averaged $28.87/MWh for a 1.3% year-over-yeardecline, leading U.S. average implied heat rates for barge-delivered coal toedge 0.8% higher year over year, while those of rail-delivered coal fell 11.8%over the same period.

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SNL Energy is an offering of S&P Global Market Intelligence.Market prices and included industry data are current as of the time ofpublication and are subject to change. For more detailed market data, includingpower,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages.