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MISO Power Tracker: Hurricane's gas supply impact boosts Southern prices

Highlights

Emergency alerts prompt Texas Hub spike

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Houston — Hurricane-related natural gas price increases and transmission constraints boosted the Midcontinent Independent System Operator's Louisiana and Texas hubs' day-ahead on-peak prices substantially in August, compared with July, but month-to-month prices were down elsewhere in MISO, and year-to-year changes were mixed.

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MISO's October power forwards were up on the month but mixed on the year, despite natural gas forwards' strength in both comparisons.

The MISO Texas Hub day-ahead on-peak locational marginal price jump was particularly striking, surging to $386.20/MWh for delivery Aug. 28, before dropping to less than $40/MWh on Aug. 29, according to S&P Global Platts price data.

MISO declared several severe weather alerts beginning Aug. 23 and implemented several steps to maintain grid integrity thereafter, including conservative operations -- suspending transmission and generation maintenance -- and rolling blackouts on Aug. 27. The conservative operations declaration has been extended to Sept. 4.

Constraints on natural gas supplies expected from the shutdown of production in the Gulf of Mexico appear to have prompted a 22-cent price increase, about 9.4%, to $2.555/MMBtu on Aug. 25 at the Houston Ship Channel, which is an important location for the Texas Hub. The Houston Ship Channel price ended the month at $2.45/MMBtu, according to Platts' price database.

The spot gas price at Henry Hub, which is important for the Louisiana Hub as well as the nation, averaged $2.222/MMBtu this August, up 31.1% from this July and up 2.6% from August 2019.

The spot gas price at the Chicago city-gates, which is important for MISO's North and Central regions, averaged $2.052/MMBtu this August, up 22.7% from this July and up 3.5% from August 2019.

Higher gas prices tended to prompt a shift to coal-fired resources, which led the generation mix this August at 40.5%, up from this July's 37.5% and up from August 2019's 38.7%.

Gas-fired generation's share fell to 33.8% this August from this July's 39.1% and from August 2019's 36.6%.

MISO's wind fleet continued to grow its share of the mix at 7.9% this August, up from 5.7% this July and 4.8% in August 2019.

Despite the extreme conditions in MISO's southern region, loads were stable and the weather was much milder in August than it was in July.

Daily peakloads averaged 100.2 GW this August, down from this July's 106.4GW but barely higher than August 2019's 100 GW.

Total heating- and cooling-degree days this August were 29.5% less than July's total but 20.9% more than those of August 2019.

Forward markets

Looking forward, Indiana Hub October on-peak packages averaged $30.95/MWh in August, up 2.8% from this July's $30.10/MWh and up 3.1% from the $30 that October 2019 on-peak packages averaged in August 2019.

Louisiana Hub October on-peak packages averaged $30.10/MWh this August, up 0.6% from this July's $29.90/MWh but down 5.2% from the $31.75/MWh that October 2019 on-peak packages averaged in August 2019.

In contrast with these relatively tame movements in power prices, natural gas forwards moved up substantially.

Chicago city-gates October gas averaged $2.189/MMBtu in August, up 30.4% from July's $1.679/MMBtu and up 10.3% from the $1.984/MMBtu that October 2019 gas averaged in August 2019.

Henry Hub October gas averaged $2.464/MMBtu in August, up 36.1% from July's $1.811/MMBtu and up 13% from the $2.18/MMBtu that October 2019 gas averaged in August 2019.