Implied heat rates, or the efficiency rates at which the market cost of power equals the cost of burning fuel to produce electricity, sank by over half in Texas and by nearly a third in California year over year in July as wholesale power prices and underlying fuel prices in both states likewise notched substantial losses.
Spot power pricing logged the largest percentage losses in the Electric Reliability Council Of Texas and the California ISO. The ERCOT day-ahead power index tumbled 66.4% year over year in July to $38.95/MWh, while the CAISO average dipped 57.8% over the same period to $33.98/MWh. By comparison, the national average wholesale power price was off 39.5% at $33.80/MWh.
The average hourly load in July was 1.0% lower in ERCOT and 11.2% lower in CAISO compared to the year-ago level, while demand in other U.S. power markets was flat to higher.
Underlying gas prices also saw the largest percentage declines in Texas and California. Spot gas prices at hubs serving generators in CAISO fell 36.7% year over year to $2.523/MMBtu in July and slid 26.7% to $1.967/MMBtu in ERCOT. Prices on a nationwide basis slipped 24.4% to $2.175/MMBtu.
Implied heat rates fell faster in ERCOT and CAISO than in the U.S. as a whole. As gas-fired implied heat rates slid by nearly 20.0% year over year on a nationwide basis in July, they tumbled 54.2% in ERCOT and 33.3% in CAISO. Coal-fired implied heat rates deflated by 28.7% to as much as 34.9% for the U.S., depending on the type of coal used, but dropped by roughly 60.0% in ERCOT and fell by more than 40.0% in CAISO.
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.