ERCOT Tracker: Power, gas prices hit records during Feb. 14 winter storm

Houston — February's monthly average day-ahead on-peak locational marginal prices in the Electric Reliability Council of Texas hit records above $1,500/MWh due to the Feb. 14 winter storm that resulted in several days with real-time prices at the $9,000/MWh systemwide offer cap.

April forwards also strengthened in February, both on the month and year, primarily because of a big jump in natural gas forwards.

As an example of the extreme day-ahead on-peak pricing, ERCOT North Hub averaged $8,800/MWh for delivery Feb. 17.

Before this February, the highest day-ahead on-peak price had been since S&P Global Platts began assessing ERCOT hub prices March 1, 2002, was $974.57/MWh at the Houston Hub during a heat wave for delivery Sept. 5, 2019.

The winter this February was particularly brutal, according to CustomWeather data. The population-weighted average heating-degree days were up by almost 33% from January and almost 49% from February 2020. The population-weighted average daily low was 34.8 degrees Fahrenheit this February, which is 12.8% below this January's 39.9 degrees F and about 15.5% below February 2020's 41.2 degrees F.

Natural gas prices also hit records. At the Houston Ship Channel, spot gas averaged $55.353/MMBtu this February, compared with this January's average of $2.605 and February 2020's $1.848/MMBtu, according to Platts price database. At the Waha pricing point, spot gas averaged $34.66/MMBtu this February, compared with $2.488/MMBtu this January and 46.7 cents/MMBtu in February 2020.

Houston Ship Channel hit a record $400/MMBtu on Feb. 17. Before this February, the highest price had been $24.9555/MMBtu on Feb. 26, 2003, according to Platts records going back to Oct. 26, 1994.

Waha spot gas hit a record $208.70/MMBtu on Feb. 17. Before this February, the previous record was $24.10/MMBtu on Feb. 26, 2003.

Generation mix

Gas-fired generation outages were blamed for about half of the 52.3 GW of generation that went out of service over Feb. 15-17, out of a total capacity of about 107.5 GW. Various market participants blamed much of the gas generation outages on lack of gas supply due to power outages from the well-head through the pipeline process, or freezing of gas processing and transport facilities.

However, the gas fleet's share of power supplied this February, at 45.7%, was up both on the month and year. Gas' share was 37.9% this January and 44.8% in February 2020.

Coal-fired generation's share, at 19.1%, was down from this January's 22.1% but up from February 2020's 14.8%

Both wind and nuclear power's share were down this February, at 20.6% and 11.4%. Wind's share was 25% this January and 25.7% in February 2020. Nuclear's share was 12.3% this January and 12.7% in February 2020.

Solar power's share was down on the month but up on the year, snagging 2.3% this February, 2.4% this January and 1.4% in February 2020.

Forward markets

Power traders may be foreseeing some upside risk this April, as ERCOT North April on-peak power averaged $29.40/MWh this February, up from about $26.75/MWh this January and up from the $24.80/MWh that April 2020 gas averaged in February 2020.

Houston Ship Channel April gas averaged $2.852/MMBtu this February, up from $2.591/MMBtu this January and up from the $1.827/MMBtu that April 2020 gas averaged in February 2020.

The Waha spot gas pricing difference is even more stark, with April gas averaging $2.577/MMBtu this February, up from $2.305/MMBtu this January and up from the negative 30.3 cents/MMBtu that April 2020 gas averaged in February 2020.

The National Weather Service's three-month forecast for March, April and May, issued Feb. 18, called for enhanced chances – between 50% and 80% -- for above-average temperatures across the state over the period.