POWER MARKETS
WEST As drought conditions in the Pacific Northwest have lowered the forecasted summer water supply over the past few weeks and market participants gear up for the usual summertime volatility, the fear premium has risen substantially in Mid-C. Consequently, the forward curve for Q3 in Mid-C has skyrocketed, and the spread between SP15 and Mid-C for Q3 has narrowed from $30/MWh on April 1 to $0.50/MWh on May 5.
ERCOT Despite the warning late last week regarding possible capacity deficiencies for this past Monday due to temperatures in the 90s amid continuing outages of approximately 20,000 MW, 7x24 real-time prices have averaged only in the upper $20s/MWh across most zones this week. The one exception is the Houston Load Zone, where the average has been around $80/MWh because of last Friday’s transmission-line outage, which swelled prices to $3,000/MWh for two hours. Looking ahead, ERCOT this morning released its final assessment for this summer. Provided that weather conditions are normal this summer, generation is projected to be adequate to meet expected record peak hourly demand, but the system could endure capacity shortfalls if wind output is too low, forced outages are more rampant than usual, or weather turns extreme at peak times. Forward on-peak prices for this summer retreated by about $1.50/MWh on the day.
EAST Settled prices have not moved much from last week’s averages. All main hubs are still printing in the mid-to-high $20s/MWh. In other news, the 1 GW Indian Point nu-clear plant in New York officially shut down on April 30, its capacity to be replaced primarily with gas-fired generation.