US POWER TRACKER: SPP prices climb to 17-month highs, set peakload record in July

Southwest Power Pool wholesale power prices reached 17-month highs in July as multiple peakload records were set during a heat wave, while coal-fired generation eased, and power forwards continued to climb.

SPP set peakload records five times in July(opens in a new tab). The record, reached July 19, currently stands at 53.243 GW, when Oklahoma City temperatures rose to a record 110 degrees Fahrenheit, according to the US National Weather Service.

Peakload averaged 48.346 GW in July, a 10.5% year-on-year jump, according to SPP data. Population-weight temperatures across SPP's footprint averaged 82.34 degrees Fahrenheit, up 4.4% from last year, as heating degree days averaged 26% higher than July 2021 and 10.3% higher than normal, according to CustomWeather data.

Fuel mix changes

As demand soared, coal-fired power generation dropped. Coal remained the lead fuel source in July at 39.5% of the total fuel mix, even as it fell 6 percentage points year on year, according to SPP data.

Natural gas-fired power filled in the gap, accounting for nearly 29% of the mix, up 4.2 points from a year ago and a 7.8 point month-on-month(opens in a new tab) increase, as wind-powered generation made up 24.4% of the fuel mix, an increase of 4.2% year on year, but a drop of 7 points month on month, according to SPP data.

Total generation grew 12.6% from July 2021 to an average 40.456 GW, according to SPP data.

Increased cooling demand from the heat wave drove up spot prices.

SPP South Hub on-peak day-ahead locational marginal prices averaged $119.31/MWh in July, a jump of 156.7% year on year(opens in a new tab), as prices reached as high as $151.29/MWh July 8, a 17-month high, according to SPP data. South Hub on-peak real-time LMP reached a high of $168.31/MWh July 18, a one-month high.

Spot gas process at Panhandle Texas-Oklahoma averaged $6.637/MMBtu, 91% higher year over year, but a drop of 7% from June, according to S&P Global Commodity Insights pricing data. Prices fell as low as $5.285/MMBtu July 7, a three-month low.

Forwards curve

SPP South Hub on-peak August rolled off the curve at $122.80/MWh, 157% above where the 2021 package ended, according to S&P Global Commodity Insights data. The August 2022 package reached a high of $139.10/MWh July 18.

Down the curve, on-peak September is currently around $93.50/MWh, 133% above where its 2021 counterpart was a year ago, while the October package is about $77/MWh, 155% higher. The September package has fallen more than $18 since a package high of $111.75/MWh was reached July 26, while the October package is down $9 from a package high of $95.95/MWh reached May 3.

Power forwards followed higher gas forwards.

Panhandle Texas-Oklahoma August rolled off the curve at $8.087/MMBtu, 118% higher than its 2021 counterpart, as the September contract is currently around $7.593/MMBtu, 111% above where the 2021 contract was a year ago, while the October contract is around $7.605/MMBtu, 114% higher.

The three-month outlook indicates greater chances for above-normal temperatures across the SPP footprint, according to the US National Weather Service.