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Electricity Monthly Update

With Data for September 2019  |  Release Date: Nov. 26, 2019  |  Next Release Date: Dec. 23, 2019

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Regional Wholesale Markets: September 2019

The United States has many regional wholesale electricity markets. Below we look at monthly and annual ranges of on-peak, daily wholesale prices at selected pricing locations and daily peak demand for selected electricity systems in the Nation. The range of daily prices and demand data is shown for the report month and for the year ending with the report month.

Prices and demand are shown for six Regional Transmission Operator (RTO) markets: ISO New England (ISO-NE), New York ISO (NYISO), PJM Interconnection (PJM), Midwest ISO (MISO), Electric Reliability Council of Texas (ERCOT), and two locations in the California ISO (CAISO). Also shown are wholesale prices at trading hubs in Louisiana (into Entergy), Southwest (Palo Verde) and Northwest (Mid-Columbia). In addition to the RTO systems, peak demand is also shown for the Southern Company, Progress Florida, Tucson Electric, and the Bonneville Power Authority (BPA). Refer to the map tabs for the locations of the electricity and natural gas pricing hubs and the electric systems for which peak demand ranges are shown.

In the second tab immediately below, we show monthly and annual ranges of on-peak, daily wholesale natural gas prices at selected pricing locations in the United States. The range of daily natural gas prices is shown for the same month and year as the electricity price range chart. Wholesale electricity prices are closely tied to wholesale natural gas prices in all but the center of the country. Therefore, one can often explain current wholesale electricity prices by looking at what is happening with natural gas prices.

Wholesale prices

Selected wholesale electricity pricing locations

Wholesale electricity prices were bifurcated in September, with prices in the eastern United States generally on the lower side and points west of the Mississippi River much higher. Prices peaked during the month in New England (ISONE) at $32/MWh, in New York City (NYISO) at $33/MWh, and at $41/MWh in the Mid-Atlantic. Compare this to peak prices of $975/MWh in Texas (ERCOT), $98/MWh in the Southwest (Palo Verde), $79/MWh in Southern California (CAISO), $69/MWh in the Northwest (Mid-C), and $60/MWh in Northern California. The huge price spikes in Texas (ERCOT) came during the first week of the month, where heat indexes topped 110 degrees Fahrenheit and several days broke the old system demand record for September. These price spikes are also the result of the market construction in ERCOT. In other power markets there are forward capacity markets where customers pay, and generators receive, payments for offering generating capacity into the market. This capacity market design tends to lower price spikes and price volatility as more generators sit idle and available to meet demand. It can also lead to some generators receiving payments whether they ever produce electricity or not. ERCOT lacks this forward capacity market, leading to higher price sensitivity in their “energy-only” market. In ERCOT, you only get paid when you produce electricity.

Wholesale natural gas prices remained very low across the country during the month. At the Henry Hub in Louisiana, which historically was the proxy pricing point for the U.S., prices ranged between $2.33/MMBtu and $2.75/MMBtu in September. Prices were lower at other locations, dipping to $1.06/MMBtu in the Mid-Atlantic (Tetco M-3), $1.07/MMBtu in New York City (Transco Z6 NY), $1.20/MMBtu in New England (Algonquin), and $1.76/MMBtu in the Midwest (Chicago Citygates), all of which were new 12-month low prices at these locations.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Electricity system peak demand levels were fairly high relative to historical norms for the month as extremely warm temperatures blanketed much of the country. Colorado, Louisiana, New Mexico, Ohio, and Texas all experienced their warmest Septembers in 125 years of available data and 19 other states experienced a top-5 warmest September on record. This resulted in a new September all-time high system daily peak demand in Texas (ERCOT), though it remained well below the new all-time high record system in ERCOT for August. Demand nearly set a new 12-month high in California (CAISO), with demand of 43,731 MW on September 3 falling just 118 MW short of the most recent 12-month high. Southern Company also came within three percent of its latest 12-month demand high when it exceeded 44,000 MW on September 17, which is very late in the year to post such a high daily demand figure.

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