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About Commodity Insights
04 Jan 2022 | 21:05 UTC
By Kassia Micek
Highlights
Mid-C on-peak January reached package high of $115/MWh
Northwest average temperatures dipped to a 59-month low
Sumas, PG&E city-gate spot prices reach 10-month highs
US Western wholesale power prices averaged 71% higher in December than a year ago, the biggest year-on-year jump across the nation, on increased demand from colder weather and higher gas prices, while the natural gas share of the fuel mix slipped.
California Independent System Operator peakload averaged 28.721 GW in December, up 2.4% year on year, according to CAISO data. Population-weighted temperatures averaged 6% lower than last December leading to 33% more heating-degree days, according to CustomWeather data.
In the Northwest, peakload increased nearly 8% from a year ago, according to Bonneville Power Administration data. Population-weighted temperatures averaged 10% lower than last December leading to 58.5% more heating-degree days, according to CustomWeather data.
Prices across the West reached a three-month high on low temperatures. California trading locations had the highest prices in the West.
NP15 on-peak day-ahead locational marginal prices averaged $65.46/MWh in December, climbing 55.4% year on year, according to CAISO data. SP15 on-peak day-ahead to real-time spread averaged $11.54 in December with on-peak day-ahead averaging $61.53/MWh, up 53% year on year.
In the Northwest, Mid-C on-peak day-ahead jumped 88.1% year on year to average $57.62/MWh in December, according to S&P Global Platts pricing data. Prices spiked to $124.61/MWh on Dec.27, the highest level since summer, as average temperatures dipped to a 59-month low, according to CustomWeather data.
In the Desert Southwest, Palo Verde on-peak day-ahead reached a three-month high of $74.11/MWh on Dec. 27, according to Platts pricing data.
Also helping to drive up power prices, natural gas spot prices at Sumas were up 79.4% year on year to average $5.688/MMBtu in December, after reaching a 10-month high of $10.125/MMBtu on Dec. 23, according to Platts pricing data. Likewise, PG&E city-gates reached a 10-month high of $7.880/MMBtu on Dec. 23, while SoCal city-gates reached a three-month high of $8.925/MMBtu on Dec. 14.
Natural gas-fired generation remained the lead fuel source in December averaging 34.1% of the total fuel mix, despite slipping 3.6 percentage points year on year, according to CAISO data.
Filling in, nuclear generation increased 4 points year on year to average 8.8% of the fuel mix. Pacific Gas and Electric's 1,197-MW Diablo Canyon-2 was offline last December for maintenance.
Wind-powered generation added 2.4 points from a year ago to average 8% of the mix and imports increased 1.2 points to average 30.7%, according to CAISO data.
Total generation averaged 25.788 GW, up 11% from last December.
In BPA's footprint, gas generation was down less than 1% year on year to average 8% of the total December fuel mix, while hydro rose 3.9 points to 79.5% and wind increased 1 point to 6.1%, according to BPA data. A winter storm brought more precipitation to the region and bumped up The Dalles water supply forecast to end the month at 104% of normal for the April-September forecast period, according to Northwest River Forecast Center data
In power forwards, Mid-C on-peak January rolled off the curve at $63.69/MWh, 89.3% higher than where the 2021 package ended, according to Platts data. Prices reached a package high of $115/MWh Dec. 22, 215% above where the 2021 package was a year ago.
On-peak February is currently in the upper $40s/MWh, 88% above it's 2021 counterpart last year at this time, while the March package is in the upper $20s/MWh, 35% higher.
While the six- to 10-day outlook indicated a greater probability for above-normal temperatures through Jan. 14 in most of the West, the three-month outlook shows greater chances for below-normal temperatures, according to the US National Weather Service.