Analysis: West Tracker: Prices rebound on summer heat, increased load as reopening continues - S&P Global

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Houston — Western wholesale power prices in June jumped on average 26% month on month as demand increased with the continued reopening of businesses and with warmer weather moving into the region.

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Meanwhile, forward packages plunged on continued weak gas prices despite temperatures forecast to be above normal during the summer months, according to the three-month outlook from the US National Weather Service.

Forwards remain weak

Mid-C on-peak July averaged $29.35/MWh, a decrease of 47.6% from where the 2019 package averaged a year ago, according to S&P Global Platts data. The 2020 package rolled of the curve at $22.05/MWh, a package low and 54% lower than there the 2019 package ended.

The trend continued down the curve.

Mid-C on-peak August averaged $38.81/MWh, 40.6% lower than the 2019 package last year, and on-peak September averaged $32.74/MWh, 18.5% lower, according to Platts data.

In Cal-ISO, SP15 on-peak July rolled off the curve at $35/MWh, the lowest level in two years and 29.3% below where the 2019 package ended, according to Platts data. The 2020 package averaged $39.48/MWh in June trading, a decrease of 35% from where the 2019 package averaged a year ago.

SP15 on-peak August averaged $44.74/MWh, down 35.6% from where the 2019 package averaged last year, as on-peak September averaged $39.93/MWh, down 21.5%.

Power forwards followed gas forwards lower.

SoCal city-gate July averaged $1.889/MMBtu, down 31.5% from the 2019 contract a year ago. The August contract averaged $2.074/MMBtu as the September contract averaged $1.928/MMBtu, down 28% and 20%, respectively.

Spot prices rebound

Outside of the Pacific Northwest, spot prices had strong rebounds in June.

Palo Verde on-peak day-ahead averaged $25.15/MWh in June, spiking 70.2% from May, the largest month-on-month move across the country, according to S&P Global Platts data.

In the neighboring California Independent System Operator footprint, peakload averaged 31,965 MW in June, jumping 13% from May and nearly 2% higher than a year ago, according to ISO data. Los Angeles had 47.3% more cooling-degrees days in June than last year and 40% more than normal, according to US National Weather Service data.

SP15 on-peak day-ahead locational marginal prices averaged $22.02/MWh in June, jumping 38.6% month on month, but still 6.3% lower year on year, according to ISO data. NP15 on-peak real-time LMP plunged 40.2% year on year to average $24.44/MWh in June.

Power prices followed spot gas lower year on year as SoCal city-gate spot gas averaged $1.896/MMBtu in June, a drop of 17.3% year on year.

Further north, Bonneville Power Administration peakload averaged 6,616 MW in June, up 3.3% month on month, but down 2.1% year on year.

Mid-C on-peak day-ahead averaged $10.40/MWh in June, sinking 47.2% year on year, the biggest drop across the country, according to S&P Global Platts data. Off-peak sank 111.6% year on year to average negative $1.55/MWh for the month as pricing fell as low as negative $14.66/MWh on June 7 and 8, a record low.

A surge of cheap hydropower helped pulled down prices in the Pacific Northwest.

PNW hydro surging, Cal-ISO hydro plunges

Hydro generation averaged 88.2% of the fuel mix for June, climbing 8.5 percentage points year on year and up 4.2 percentage points month on month, according to BPA data. Hydro output averaged 286,373 MWh/day in June, an increase of 33.7% from a year ago and up 11% from May.

BPA wind-powered generation accounted for 6.3% of the mix, down nearly 4 percentage points on the year, as wind output averaged 20,637 MWh/d, down 25% year on year.

Thermal output plunged 77% year on year and was down 9% month on month to average 4,095 MWh/d, as it made up 1.3% of the market share, down nearly 6 percentage points from a year ago, according to BPA data.

Total load averaged 143,320 MWh/d, down 2% on the year, but up 2% on the month, according to BPA data.

Farther south, continued low gas prices helped thermal output jump nearly 60% year on year and climb 70.4% month on month to average 182,479 MWh/d in June, according to Cal-ISO data. Thermal became the lead fuel source at 25.1% of the total fuel mix for the month, an increase of 7.5 percentage points year on year.

The rise in thermal pushed down imports to the second most used fuel at 24% of market share in June, as imported generation increased 6.3% year on year to average 152,784 MWh/d, according to Cal-ISO data.

Hydro output dropped 48.2% year on year and fell 10.9% month on month to average 56,838 MWh/d in June, as market share accounted for 9.1% of the mix, a decrease of 8.5 percentage points year on year and down 2.3 percentage points month on month.

Total Cal-ISO generation averaged 638,169 MWh/d for the month, up 14.4% from May.

ISO generation data for June 7 was incomplete and excluded from monthly calculations.

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