In an otherwise quiet session of trade, U.S. power markets in the northernmost corners of the country saw impressive gains Tuesday, Dec. 19, driven by the return of colder weather and higher demand, as well as a recovery in spot natural gas prices.
After gaining 13.3 cents in the previous session, January 2018 natural gas futures pulled back Tuesday, retreating 5.3 cents to close at $2.692/MMBtu. However, spot markets continued higher, especially in New England, where cash values spiked $5/MMBtu or more on the day.
On the demand side, load outlooks for midweek are mostly aimed higher as colder weather begins to sweep across the northern half of the country.
Northwest markets pop higher amid colder weather
Much colder air dropping down from Canada before crossing the northern tier of the U.S. through the rest of the workweek helped reinvigorate Northwest power pricing Tuesday.
Deals at the California-Oregon Border hub were pegged in the mid- to high $30s, up more than $7 on the day and just $1 above Mid-Columbia, which followed prior-day losses with a gain of $9. Demand in the Northwest Power Pool on Tuesday is expected to top 60,000 MW, or about 87% of its seasonal peak load.
Markets farther south did not share the same upside enthusiasm. South Path-15 in California was down more than $5 on the day but was still the highest priced in the low $40s, topping North Path-15 by almost $7. California ISO load is expected to reach 30,857 MW on Wednesday, about even to Tuesday's forecast high.
In the Southwest, Palo Verde was flat in the mid- to high $20s while Mead climbed more than $4 to an index in the low $30s.
Spiking spot gas prices help propel Northeast power dailies
On the opposite coast, another rally in Northeast spot natural gas markets was enough to drive big gains at regional power markets Tuesday.
In New England, power dailies at the Mass hub ranged from the mid-$60s to the high $70s for an average daily gain of close to $25. Already at a premium, day-ahead markets averaged $65.11, up about $8 on the day. Demand in New England is expected to hit 17,560 MW on Wednesday, up less than 100 MW on the day.
In New York, day-ahead markets moved higher in line with spot gas prices, with Zone A averaging $27.13, Zone G pegged at $34.13 and Zone J reported at $34.58. New York load is seen cresting at 21,097 MW on Wednesday, up about 250 MW on the day.
Both the New England and New York markets found additional support from the spot gas market, which saw Algonquin Citygate spike $5/MMBtu and Transco Zone 6 NY jump $3.50/MMBtu.
Farther south, next-day deals at PJM West held in the high $20s, up less than $2 on the day. PJM Western region demand could top out at 56,134 MW on Wednesday, up more than 2,500 MW on the day, while PJM Mid-Atlantic load could reach 37,293 MW on Wednesday, up close to 3,000 MW on the day.
Mild weather pressures Texas power markets
Power prices moved less than $1 or $2 in either direction Tuesday amid a slate of uninspiring fundamentals.
Day-ahead prices averaged $23.50 in ERCOT South, $21.60 in ERCOT Houston, $21.02 in ERCOT North and $20.59 in ERCOT West.
Load in the Electric Reliability Council of Texas is called to reach 40,970 MW on Wednesday, down about 100 MW on the day. According to ERCOT senior meteorologist Chris Coleman, conditions across Texas will be "mostly dry and very warm Wednesday and Thursday" with high temperatures in some areas topping 80 degrees F.
Incoming cold seen driving up Midwest demand
As cold weather descends on the Northwest and is called to move into the country's midsection by midweek, demand forecasts in the Midwest were on the move higher Tuesday.
According to the PJM grid operator, demand in the AEP region is poised to 17,304 MW at midweek, up 700 MW on the day, while PJM ComEd demand is forecast to touch a high near 13,119 MW on Wednesday, about 400 MW above Tuesday's forecast high.
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