Jan forwards dip on year with forecast
Baseload plants favored by lighter loads
Houston — Lighter loads in most areas of the Southeast US overpowered strengthening natural gas prices to weaken bilateral wholesale power prices this November, compared with November 2019, and January power also edged down in November, as a mild winter weather forecast outweighed stronger gas in forward markets.
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Register NowOutside of Florida, southeastern bilateral day-ahead on-peak indexes averaged in the mid-$20s/MWh in November, down from the high $20s/MWh in November 2019 and generally down less than 5% compared with this October, according to the S&P Global Platts Day-ahead Bilateral Index database. Florida's indexes averaged about $30/MWh this November, almost flat with October and down almost 5% from November 2019.
Load levels in the North American Electric Reliability Corporation's SERC region averaged 66.2 GW this November, according to S&P Global Platts Analytics data, almost flat with this October's 66.4 GW but down about 7.8% from November 2019's 71.8 GW.
In NERC's Florida Reliability Coordinating Council region, load levels averaged 25.6 GW this November, down 11.7% from this October's 29 GW but up 10.3% from November 2019's 23.3 GW.
Substantially milder weather drove the generally lower power demand, as population-weighted heating-degree days averaged about 49% lower on the year in North Carolina, 47% lower in Georgia, and about 70% lower in Florida, for example, according to CustomWeather data.
At the Transco Zone 4 pipeline, which is important to Into Southern bilateral power trading, spot gas averaged $2.507/MMBtu this November, up 15.2% from this October's $2.176/MMBtu but almost flat with November 2019's $2.543/MMBtu.
At the Florida Gas Zone 3 pipeline, spot gas averaged $2.594/MMBtu this November, up almost 13% from this October's $2.297/MMBtu but almost flat with November 2019's $2.577/MMBtu.
Forward markets
Gas price strength was also evident in forward markets, as Transco Zone 4 January gas averaged $2.927/MMBtu this November, up 8.7% from the $2.693/MMBtu that January 2020 gas averaged in November 2019, but down by more than 11.1% from this October's $3.294/MMBtu.
Florida Gas Zone 3 January contracts averaged $2.982/MMBtu this November, up 9.9% from the $2.713/MMBtu that January 2020 gas averaged in November 2019, but down 10.9% from this October's $3.347/MMBtu.
However, January power forwards bucked the year-on-year strength, with Into Southern January on-peak averaging about $31.50/MWh this November, down 11.9% from January 2020 packages in November 2019 and down 11.2% from this October's $35.43/MWh.
Florida January on-peak averaged about $31.20/MWh this November, down 9.9% from the $34.62/MWh that the January 2020 on-peak packages averaged in November 2019 and down 11% from this October's $35.05/MWh.
The weather forecast likely played a role in power forwards' weakness in the face of gas forward strength. The National Weather Service's Nov. 19 forecast for December, January and February indicated a strong likelihood – between 40% and 60% -- of above-normal temperatures across the Southeast.
Generation mix
Regarding the fuel mix in the Southeast this November, the light loads and strengthening gas prices gave the leading share to baseload nuclear generation, moving up from this October's No. 2 position, and the Florida baseload coal fleet's output surged, albeit not enough to overtake the Sunshine State's nuclear fleet.
Nuclear power supplied 33.7% of the power to the SERC region this November, followed by the gas fleet's 32.2% and the coal fleet's 22.7%, according to Platts Analytics data. This October, gas-fired generation supplied 35%, leading nuclear's 34.1% and coal plants' 20.7%. In November 2019, gas had a 36.2% share, compared with nuclear's 31.9% and coal's 25.2%.
In the FRCC region this November, the gas fleet provided 70.1%, nuclear provided 12.7% and coal provided 11.7%. This October, the gas fleet provided 73.5%, nuclear provided 11% and coal provided 9.9%. In November 2019, gas had a 70.4% share, followed by nuclear's 13% and coal's 9.4%.
The Florida coal fleet's output not only increased its share, but also its output in absolute average terms, supplying the grid with an average of 2.8 GW this November, up from 2.6 GW this October and less than 2.1 GW in November 2019.
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Southeast Power Tracker: Lighter loads weaken power prices, even as gas surges - S&P Global
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