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PJM Tracker: Power prices dip on slowing economy, milder weather, cheaper gas

Highlights

Gas, nuclear, wind shares increase

Forwards fall with gas futures, weather forecast

Houston — Wholesale power prices in the PJM Interconnection dropped both month to month and year on year, as the weakening economy and milder weather sapped energy demand and weakened natural gas prices.

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At three geographically dispersed PJM hubs, day-ahead on-peak locational marginal prices averaged in the high teens to low $20s/MWh, down by more than 35% from the same period of 2019 and down between 3.5% and 9.3% from this February's averages, according to S&P Global Platts data.

Peakloads averaged 87.9 GW in March, down from 99.6 GW in February and 98.2 GW last March, according to PJM data.

Population-weighted heating-degree days this March averaged 37.5% less than February and 30.5% less than March 2019, according to CustomWeather data. Population-weighted daily low temperatures averaged 40.3 degrees Fahrenheit in March, up from in February's 31.4 degrees F and last March's 37.7 degrees F.

Eleven of the 12 states served at least in part by PJM instituted stay-home orders or advisories in response to the novel coronavirus pandemic between March 20 and March 30, and the last one, Pennsylvania, issued its statewide stay-home order on April 1.

As power demand diminished, so did natural gas prices. At the Texas Eastern M3 pricing point, spot gas averaged $1.463/MMBtu in March, down from $1.764/MMBtu in February and $2.871/MMBtu last March.

GENERATION MIX

With such inexpensive fuel, gas-fired generation easily expanded its leading share of the PJM average daily generation mix to almost 41%, up from 39.4% this February and 34.6% in March 2019.

Nuclear generation also expanded its share to 35% in March, up from 33.6% in February and 32.3% in March 2019.

Wind's share increased to 4.2% of supply in March, up from 3.8% in February and 3.6% in March 2019.

In contrast, coal-fired generation's share continued to diminish, falling to 15.8% of the average daily generation mix in March, down from 19.5% in February and 25.6% in March 2019.

FORWARDS MARKETS

PJM's forward packages followed a pattern of weakness similar to day-ahead markets, reflecting natural gas futures and mild weather forecasts.

PJM West April on-peak packages averaged $22.28/MWh in March, down from $26.13/MWh in February and down from $34.86/MWh for the comparable package in March 2019.

PJM West May on-peak averaged $22.60/MWh in March, down from $26.47/MWh in February and down from $35.86/MWh for the comparable package in March 2019.

Tetco M3 April gas averaged $1.461/MMBtu in March, down from $1.656/MMBtu in February and down from $2.627/MMBtu for the comparable package in March 2019.

Tetco M3 May gas averaged $1.467/MMBtu in March, down from $1.634/MMBtu in February and down from $2.552/MMBtu for the comparable package in March 2019.

The National Weather Service forecast for April, issued March 31, indicates enhanced chances – between 40% and 50% -- for above-normal temperatures for all of the PJM footprint. The forecast for April, May and June, issued March 19, featured even stronger chances – between 40% and 60% -- for above-normal temperatures for the PJM region as a whole.