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Daily power prices flounder despite strong pre-holiday load forecasts

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


Daily power prices flounder despite strong pre-holiday load forecasts

Next-day power prices across the U.S. turned lower Tuesday, Nov. 21, as prices at most locations ignored strong Wednesday demand forecasts and varied spot gas prices.

Warmer weather forecasts and rising production levels fueled another downtick in gas futures Tuesday with the front-month December contract shedding 3.0 cents to settle at $3.017/MMBtu. In addition, spot gas markets were mixed and offered little support to power dailies.

In other supply, following the loss of NextEra Energy Inc.'s Turkey Point 3 in Florida, total U.S. nuclear plant availability slipped to 93.13% early Nov. 21.

Western US power markets slip with holiday demand

Subdued holiday demand alongside a drop in spot gas prices pulled down markets in the West on Tuesday.

To account for the Thanksgiving holiday Nov. 23, markets in the West traded power for Nov. 24 delivery with typically subdued holiday demand pulling down values.

Power dailies in California saw the biggest decline, with value dropping more than $10 and spanning the high $30s. Hubs in the Southwest saw trades slip $1 to $2 on the session and range in the mid- to high $20s at Palo Verde and the high $20s at Mead. Markets in the Northwest fared no better, with Mid-Columbia values shedding roughly $2 in the low to mid-$20s while deals at the California-Oregon Border hub saw a daily loss of about $5 in the low $30s.

Demand in California is called to reach highs of 30,225 MW on Tuesday and 31,958 MW on Wednesday.

East packages lean flat to lower despite demand, gas support

Strong demand forecasts and rising spot gas prices could not stop most next-day markets in the East from easing Tuesday.

At the next-day markets, New York Zone G deals shed roughly a dollar from Monday and were done in the low $30s, while the New England Mass hub saw next-day power deals in the low $30s as well but with values down less than a dollar. PJM West transactions were flat to Monday and were quoted in the high $20s.

Despite forecasts for elevated demand, day-ahead markets moved mixed. The Mass hub and New York Zone A saw day-ahead deals add $1 to $2 from Monday and average $33.25 and $27.52, respectively, while New York Zone J trades fell by more than a dollar to an average of $31.79. Likewise, New York Zone G transactions eased slightly and averaged $31.08.

Forecasts indicate elevated demand for the Northeast and mid-Atlantic. New England load may top out at 16,050 MW on Tuesday and 16,230 MW on Wednesday, while New York demand should crest at 19,565 MW on Tuesday and 19,904 MW on Wednesday. The PJM Mid-Atlantic region may see demand touch 33,893 MW on Tuesday and 35,175 MW on Wednesday, while demand in the PJM Western region is poised to hit 53,141 MW on Tuesday and 55,780 MW on Wednesday.

Texas deals move higher with load outlooks

Robust demand forecasts kept most day-ahead markets in Texas higher Tuesday despite easing spot gas prices.

The Electric Reliability Council of Texas is projecting peaks of 39,081 MW on Tuesday and 40,956 MW on Wednesday.

Most day-ahead markets responded to the load outlook with gains with ERCOT North and ERCOT West deals up $2 to $3 and averaging $24.81 and $24.83, respectively, while ERCOT South packages were flat to Monday and averaged $25.13. ERCOT Houston trades extended prior-day losses and slipped by a dollar to an average of $24.42.

Midwest values supported by gas, pressured by mixed demand

Daily power markets in the Midwest spent a quiet Tuesday session boosted by spot gas prices but kept in check by outlooks for varied Wednesday demand.

Mixed demand may be in store for the region prior to the Thanksgiving holiday. The PJM AEP region is called to see peaks of 17,705 MW on Tuesday and 17,290 MW on Wednesday, while demand in the PJM ComEd region should note highs of 12,963 MW on Tuesday and 13,074 MW on 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 and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.