US POWER TRACKER: ISO New England power, gas prices retreat in January

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ISO New England wholesale power prices followed natural gas prices lower in January, with spot gas prices down around 66% on month and 76% on year, power prices declined by around 57% on month and 66% on year.

ISO-NE Internal Hub on-peak day-ahead power prices averaged $52.94/MWh in January, down about 57% from the December 2022 average of $122.94/MWh and down around 66% on year. On-peak real-time prices at the hub averaged $49.71/MWh in January, down 62% on month and about 67% on year.

Boston Hub on-peak day-ahead power prices averaged $53.42/MWh in January, which was down about 57% from the December average of $122.93/MWh and down nearly 66% on year. On-peak real-time prices were down by similar volumes on a monthly and annual basis.

Connecticut Hub on-peak day-ahead power prices averaged $51.46/MWh in January, down about 57% on month and down around 67% on year.

Spot gas prices dropped considerably as well, and with gas accounting for almost 50% of the ISO-NE fuel mix, the fuel's price movement is closely tied to power price movements. Algonquin city-gate gas prices averaged $4.72/MMBtu in January, down about 66% from the December average of $13.96/MMBtu and down around 76% from the January 2022 average of $20.00/MMBtu, according to S&P Global Commodity Insights data.

ISO-NE power demand was down 1.7% on month in January when peakload averaged 16,003 MW compared with December average peakload of 16,284 MW, according to ISO data. Average peakload was down 9.0% on year in January.

Weather did not play a major role in monthly power price movement. The average January high temperature in ISO-NE territory was 41.3 degrees Fahrenheit compared to a December average high of 41.0 degrees F, according to CustomWeather data.

The average January low temperature was 31.4 degrees F compared with an average low of 29.3 degrees F in December and heating degree days decreased from an average of 29.3 in December to an average of 28.1 in January.

Power generation fuel mix

Gas accounted for 48.6% of the ISO-NE fuel mix in January, up from 43.8% in December when gas prices were much higher and up from 43.5% in January 2022, according to ISO data.

Nuclear power accounted for 29% of the January fuel mix, virtually unchanged from 29.1% in December and up from 26.0% in January 2022.

Hydropower accounted for 11.8% of the generation mix in January, up from 11.0% in December and 6.3% in January 2022.

Solar power accounted for 1.3% of the January fuel mix, down from 1.8% in December and 1.4% in January 2022. And wind power accounted for 3.5% of the generation mix in January, down from 5.3% in December and 4.4% in January 2022.

Fuel oil was not used to generate power in January after accounting for 3.4% of the December fuel mix when it reached as high as 33.7% of the generation mix on Dec. 24 amid an extreme cold snap. Oil accounted for 10.9% of the fuel mix in January 2022 when temperatures were much lower.

Forward power, gas prices

Forward power prices eased heading into spring during January trading. On-peak Mass Hub forward power for February averaged $128.41/MWh in January trading, down about 46% on month and almost 13% on year, according to Platts M2MS data. Forward power prices for March averaged $76.84/MWh, down around 44% on month and 18% on year, and forward power for April averaged $54.10/MWh, which was down about 32% on month and 3% on year.

Algonquin city-gate forward gas prices for February averaged $14.97/MMBtu in January trading, down about 50% on month and 16% on year. The March forward package averaged $7.63/MMBtu, down around 50% on year and 23% on month, and forward gas for April averaged $4.11/MMBtu, down around 35% on month and 12% on year.

"With gas markets rebalancing and production outpacing demand, delivered natural gas prices in New England are projected to average around $5.09/MMBtu in 2023, down from over $9/MMBtu in 2022," S&P Global power market analysts said in a recent research note.

"As a result, we project on-peak power prices to average in the high $50/MWh range in 2023," the analysts said.