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PJM Tracker: December power prices were down sharply with tumbling gas prices

Highlights

Spot off-peak has premium to on-peak

Gas generation up 21% on year

Houston — PJM Interconnection December power prices sank roughly 29% year on year on plummeting natural gas prices and lower power demand, as forward packages tumbled on lower gas forwards.

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PJM Interconnection peakload fell 1.6% year on year to average 100,060 MW in December, but increased 6% month on month, according to PJM data. Philadelphia had 5.5% fewer heating-degree days in December than normal, but 7% more than last year, while Chicago had 16.8% fewer heating-degree days than normal and 2.3% fewer than last year, according to the National Weather Service.

SPOT

PJM East Hub day-ahead on-peak location marginal prices dropped 38.9% year on year to average $24.34/MWh in December, as off-peak sank 40.5% year on year to average $24.80/MWh, a slight premium to the on-peak package.

In addition to PJM East Hub, AD Hub and NI Hub day-ahead off-peak LMPs were a premium to on-peak. NI Hub off-peak fell 13.3% to average $23.25/MWh compared with on-peak at $22.87/MWh, while AD Hub off-peak lost 26% to average $25.08/MWh compared with on-peak at $24.82/MWh, which had the biggest month-on-month movement, down 19.6%.

The day-ahead to real-time spread was less than $1 the across PJM region. Helping pull down power prices, spot gas at Texas Eastern M-3 plunged 37.1% year on year and dropped 2.3% month on month to average $2.401/MMBtu in December.

FUEL MIX

Lower prices helped natural gas-fired generation remain the lead fuel source in December at 36.6% of the total market share, up 7 percentage points year on year and up 2.2 percentage points month on month, according to PJM data. Natural gas output averaged 829,146 MWh/day, a jump of 21% year on year and up 14% month on month.

Nuclear generation accounted for 35.7% of total PJM generation, up nearly 1 percentage point month on month, as output averaged 804,934 MWh/d, up 10% month on month.

Coal-fired generation dropped more than 7 percentage points year on year and decreased nearly 4 percentage points month on month to make up nearly 21% of the overall market share in December. Coal output averaged 471,858 MWh/d, plunging nearly 27.4% year on year and down about 8.5% month on month.

In renewables, wind-power output averaged 91,885 MWh/d, up 23.5% year on year and up 29% month on month to account for 4% of the fuel mix, while hydro output averaged 41,785 MWh/d, up nearly 16% month on month but down 22.5% year on year to make up less than 2% of market share. Other renewables averaged 13,972 MWh/d, up nearly 15% month on month.

Total PJM generation averaged 2,268 GWh/d, up 7.3% month on month, but down 2.1% year on year.

FORWARDS

In forward markets, PJM power packages trended down on lower gas forward prices.

Transco Zone 6 non-New York January averaged $4.241/MMBtu, down 23.2% month on month and a decrease of 45.2% from where the 2019 contract averaged a year ago, according to S&P Global Platts data. The February contract averaged $4.062/MMBtu, down 19.8% month on month and down 16% from the 2019 contract a year ago, as March averaged $2.506/MMBtu, a decrease of 14.7% month on month and down 38% from the 2019 counterpart.

PJM West Hub on-peak January averaged $38.36/MWh, a drop of 22.2% month on month and a decrease of 39.1% from where the 2019 package averaged a year ago. The 2020 package started the month in the low $40s/MWh and steadily fell throughout the month to roll off the curve at $31.25/MWh, $18.70 lower than where the 2019 package ended.

PJM West Hub on-peak February averaged $37.35/MWh, down 19% month on month and a drop of 38.8% from where the 2019 package averaged a year ago, while the March package averaged $31.95/MWh, down 8.7% month on month and a decrease of 33.2% from its 2019 counterpart.

-- Kassia Micek, kassia.micek@spglobal.com

-- Edited by Mark Watson, newsdesk@spglobal.com