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Highlights

Zone J on-peak power up 91% on year

Transco Zone 6 spot gas up 75% on year

Average New York Independent System Operator power prices across major hubs increased by 50% year over year in May as natural gas prices increased nearly 75% on year, while forward power and gas prices pushed higher than a year ago heading into summer.

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NYISO Zone J New York City real-time on-peak spot power prices increased the most on a year-over-year basis, jumping $14.55/MWh from the May 2020 average of $16.08/MWh, a 90.52% increase. Zone J day-ahead on-peak power prices increased 76% year over year, according to NYISO data.

Hudson Valley Zone G real-time on-peak prices jumped 89% in May from a year ago, and monthly, real-time on-peak prices at the hub increased by 11%.

NYISO Zone A power prices bucked the trend, with real-time on-peak prices increasing by 27% year over year and day-ahead on-peak prices decreasing by 2.25% in May compared to the same month in 2020. Zone A real-time on-peak prices increased by 75% in May 2021 compared with April.

"We note the potential for further upside to Zone A prices in the balance of the year at the risk of increased congestion associated with construction on the Empire State transmission line," Kieran Kemmerer, power market analyst with S&P Global Platts, said in an email.

Some of the May spot power price increases were due to Transco Zone 6 natural gas prices jumping about 75% from May 2020, increasing from an average $1.35/MMBtu to $2.36/MMBtu in May 2021. Transco Zone 6 spot gas prices also increased by about 11% monthly from April to May.

Average NYISO peak load increased 5.4% with higher temperatures in May from April as heating demand began giving way to cooling demand and coronavirus pandemic related restrictions that had depressed power demand in May 2020 continued to ease as more New Yorkers received vaccinations.

The statewide vaccination rate was at 69.2% as of June 10, and the seven-day average positivity rate was down to 0.47%, according to Governor Andrew Cuomo's office.

Peak load in May averaged 17,284 MW compared to 16,216 MW in May 2020, a 6.6% increase.

Average heating degree days decreased 56% from April to May as the average temperature increased from 51 degrees Fahrenheit to almost 61 degrees F in May. After registering zero cooling degree days in April, the region had 1.86 CDD in May, according to CustomWeather data.

Power generation fuel mix

Nuclear power generation was down month over month and year over year, reflecting the impact of the 1,041-MW Indian Point Unit 3 permanently shutting down April 30. Nuclear power accounted for 26.7% of the NYISO power generation fuel mix in May, down from 31.8% in April and 31.9% in May 2020, according to ISO data.

Output from natural gas-fired and dual fuel units that can run on gas or oil was up in May compared with April, with the units supplying 19.7% and 24.3% of the fuel mix respectively. Generation from these units was up year over year as well, increasing from 16.6% and 17.6% respectively from May 2020 to May 2021.

Hydropower supplied 24.3% of New York's power supply in May, down from 25.5% in April and 27.9% in May 2020. Wind power output was also down, decreasing from 3.6% of the fuel mix in April to 2.9% in May. Wind supplied 3.7% of the power generation mix in May 2020.

Forward prices

The June power price package increased the most across major hubs in May trading compared to a year ago, with Zone G on peak power prices averaging 60% higher than in May 2020, or $30.76/MWh, up from $19.29/MWh.

Zone J prices for June averaged 71% higher than the June package a year ago. The July package averaged 73% higher than in May 2020 and Zone J August was up 44% year on year.

Zone A prices for June averaged 32% higher in May than in May 2020.

"Zone A forwards reflect a notable (~$8/MWh) premium to our forecast in July/August despite our gas price forecast above market, which is a testament to market expectations for localized congestion," Kemmerer said.

Transco Zone 6 June gas forward prices traded 56% higher than a year ago, averaging $2.27/MMBtu in May compared with $1.46/MMBtu in May 2020.

"Looking into winter 2021/22, Z6 gas prices are expected to surpass $6/MMBtu, driving on-peak power prices in Zone J into the $60/MWh range, while Zone A prices are expected to remain around $40/MWh," Kemmerer said.