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Florida power demand, prices down as strengthening Elsa nears Gulf Coast


May become hurricane by landfall

Into Southern bilaterals down $6.75/MWh

Oil and gas operations unaffected

Tropical Storm Elsa, which may become a hurricane before making landfall on the Florida Gulf Coast July 7, appears to have had little effect on the Southeast energy complex, but power demand is down from what it would have been, and power prices weakened accordingly.

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As of about 2 pm ET on July 6, the storm center was packing maximum sustained winds of 70 mph about 180 miles south of Tampa, Florida, heading north at 9 mph. The storm was strengthening and may top the 74 mph minimum for hurricane status before hitting the Gulf Coast, according to the National Hurricane Center.

The storm was forecast to skirt across Florida into Georgia and move along the Atlantic Coast, continuing as a tropical storm as it nears New York's Long Island July 9. However, offshore oil and gas producers said the storm had no impact on their operations.

Demand effects

S&P Global Platts Analytics forecasts that power demand in the North American Electric Reliability Corporation's Florida Reliability Coordinating Council will be down 11.2% from normal July 7 and down 1.6% on July 8 before bouncing back 6.9% above normal on July 9.

NERC's SERC region, formally known as the Southeast Electric Reliability Council, is forecast to have demand virtually flat from normal July 7, down 3.5% July 8 and flat again July 9.

The US Energy Information Administration reported that power demand on the Florida region's grid was forecast to average less than 29 GW July 6, down from 30.7 GW on June 29.

The Southeast US region of Alabama, northwestern Florida, Georgia and eastern Mississippi was forecast to average 30.2 GW on July 6, down slightly from 30.5 GW on June 29.

Pricing effects

On the Intercontinental Exchange, Into Southern day-ahead on-peak bilaterals were trading around $39/MWh July 6, about $6.75/MWh lower than S&P Global Platts' assessment for July 6. Florida's bilateral power market is fairly illiquid, so ICE had no significant activity on that market July 6.

However, continued tightness in natural gas markets resulting from heavy winter demand and LNG export demand contributed to spot gas trading higher July 6. Another factor may be a lack of gas-to-coal switching this summer.

Platts assessed Florida Gas Zone 3 spot gas at $3.70/MMBtu on July 6, up 5.5 cents on the day, and Transco Zone 4 spot gas at $3.685/MMBtu, up 11.5 cents on the day.