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NYISO Tracker: Higher gas, nuclear outages raise New York power prices

Highlights

Transco Zone 6 spot gas up 41% year on year

Zone A spot bucks trend, drops 20% from 2020

Zone A June is 46% above its 2020 counterpart

Higher gas prices coupled with increased natural gas-fired generation drove up New York wholesale power prices 60% year on year in April as power forwards are trending about 45% higher following stronger gas forwards.

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The New York Independent System Operator peakload averaged 16.399 GW, up 3% year on year, according to ISO data. ISO population-weighted average temperatures climbed 7.8% year on year into the low 50s F, which pulled down heating-degree days 21.4%, according to CustomWeather data.

Spot prices

NYISO Zone J NYC on-peak day-ahead locational marginal prices averaged $26.31/MWh in April, a jump of 60.4% year on year, while on-peak real-time averaged $27.26/MWh, 72.7% higher than a year ago, according to ISO data.

Helping drive up power prices, spot gas at Transco Zone 6 spot climbed 41% year on year to average $2.127/MMBtu in April, according to S&P Global Platts pricing data.

Bucking the trend, NYISO Zone A West on-peak day-ahead LMP sank 20% year on year to average $11.23/MWh in April.

"Zone A prices have been lower on account of substantial congestion resulting from line outages in upstate New York," said Kieran Kemmerer, Platts North American power and gas analyst. "The market has begun to price in anticipated Central East congestion associated with transmission outages corresponding to planned transmission upgrades across the state. Generally, this congestion keeps upstate prices lower while pushing up downstate New York prices."

The market may also be attempting to price in the impact of this congestion with the recent retirement of Indian Point nuclear power plant, which resulted in an increase in fossil-fired generation, Kemmerer said.

Generation mix changes

That impact was visible in fuel mix changes in April. Dual fuel generation jumped 5.2 percentage point year on year to average 17.9% of the total fuel mix, while natural gas-fired generation increased 1.6 points to average 19.3%, according to ISO data.

In addition to the 1,041-MW Indian Point Unit 3 permanently shutting down April 30 and ramping down operations beginning in March, Exelon's 640-MW Nine Mile Point-1 returned to the grid April 11 after completing a refueling and maintenance outage.

This caused nuclear generation to slip 3.2 percentage points year on year, yet nuclear remained the lead fuel source at 31.8% of the total fuel mix in April, according to ISO data.

In addition, hydropower generation fell 2.3 points year on year to average 25.5% for the month.

Forwards curve

NYISO Zone J on-peak May rolled off the curve at $28.10/MWh, 47.5% higher than where the 2020 package ended despite falling $1 from the beginning of the month, according to Platts data.

Zone J on-peak June is currently in the low $30s/MWh, 46% above its 2020 counterpart a year ago and a 21-month package high. Likewise, on-peak July is in the low $40s/MWh, 40% higher, and on-peak August is in the low $40s/MWh, 29% higher, both 22-month package highs.

Some of increase in forwards is likely attributable to an anticipated recovery in load, Kemmerer said, adding that New York loads were fairly subdued last year due to the coronavirus pandemic and lockdowns.

"Higher loads, combined with more fossil generation and the prospect of congestion all pose upside to forwards," Kemmerer said.

Higher gas forwards are helping drive up power forwards.

Transco Zone-6 May rolled off the curve at $2.072/MMBtu, 36.7% higher than where the 2020 contract ended, according to Platts data.

The trend continued down the curve as the June contract started its last month about 40% higher than its 2020 counterpart and has since eased to about 22% higher. The July contract started the month 25% higher than the 2020 contract last month and is currently around 15% higher, while the August contract started the month 15% above its 2020 counterpart a year ago and has eased to about 10% above.