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Weaker demand, subdued natural gas prices weigh on CAISO power markets in May

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Weaker demand, subdued natural gas prices weigh on CAISO power markets in May

Spot power prices in the U.S. were mixed but mostly lower year over year in May, with the most substantial percentage decline observed in California amid declining demand and faltering natural gas prices.

New York ISO, ISO New England, the South and West regions each logged year-over-year losses in spot power pricing in May, but the downtrend was led by the California ISO as it saw the average on-peak spot power price fall by about 28% year over year, from $32.31/MWh to $23.21/MWh.

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Total energy consumption during the month was higher across the country year over year, except in New England and California. CAISO saw total energy consumption slip by about 3% from the previous year and peak demand falter by roughly 10%.

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Spot gas prices by power region were generally lower year over year in May, but the average in California had the largest percentage reduction. The price of natural gas flowing into CAISO tumbled about 24%, from $3.030/MMBtu to $2.291/MMBtu.

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Despite seeing the largest year-over-year decline in natural gas prices, CAISO was the only market to see declines in natural gas-fired implied heat rates as power prices fell faster than natural gas prices. The gas-fired implied heat rate in CAISO was almost 5% lower year on year.

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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.