POWER MARKETS
WEST This week’s record low temperature in the Pacific Northwest have precipitated heating demand abnormally high for the month of May. One would therefore not be surprised that, while Day Ahead prices have averaged around $56/MWh in SP15 during this first half of the month, the average in Mid-C is much higher at $72/MWh. Precipitation in the Pacific Northwest has been abundant this year, but the unusually cold weather has limited the snowmelt typically expected since April. As summer approaches, snowmelt should increase to historical levels and could enhance hydro generation by approximately 3,500 MW to improve the supply stack.
ERCOT Although term gas prices have retreated somewhat from their highs of a mere week ago, term heat rates have moved higher, netting term prices higher in the front of curve and relatively flat in the outer years. Real-time prices have also continued to surge this week, particularly in the Houston Load Zone. The MTD average there is over $145/MWh, whereas the same average in the West Load Zone is under $60/MWh. Next week should feature the return of more generation units from outage and more rain, which together might help keep a lid on prices. Nonetheless, much of Texas remains mired in a severe drought, so volatility can be expected to continue in the real-time markets as summer looms.
EAST Moderate temperatures and moderate demand have done little to cool index prices, for calm and cloudy skies have kept renewable generation down while high gas prices and generation outages have elevated “thermal” generation supply costs. This week, spot prices have nestled in the upper end of the $70-$90/MWh range, higher than historical May averages.