Weekly Power Outlet US - 2024 - Week 25

Although some in Texas might object to this week being called the first heat wave of the year, heat is moving across the US this week with ISOs dealing with day ahead and real time pricing spikes as demand reaches peaks. Day-ahead pricing for this afternoon is above $100/MW is MISO, PJM, and NYISO and reaching into the $60s/MW in ISO-NE.

ISO-NE was the first to encounter issues as they declared a Power Caution after unexpected generation outages left the region short of meeting its operating reserve requirements, according to their news page. The snapshot of Real-time LMP prices below shows the issue. ISO-NE had issued an Abnormal Conditions alert on Tuesday which lasted until yesterday as today's demand was expected to be 14% lower.

Two weeks ago, we wrote about the NYISO power report where they cited a potential issue with reliability this summer. It didn't take long for that to play out as this week's heat put a strain on their generation stack. As noted in the EIA NYISO Wholesale Electricity Dashboard, the ISO needed fossil peaking during a couple of the week's afternoon peaks.

Interestingly enough, according to the report, in 2019, the New York State Department of Environmental Conservation (DEC) took steps to limit nitrogen oxide (NOx) emissions and adopted what has become known as the “Peaker Rule.” This began the phase out of peaking plants that couldn't meet the emissions goal set. Just last fall, NYISO has identified dual-fuel generators on the Gowanus 2 and 3 and Narrows 1 and 2 barges as the temporary solution for New York City’s reliability need. These are literally four generators sitting on a barge in NYC with the generating capacity of just over 500MW. These units were allowed to have their life extended past 2025 as the ISO has called for potential shortfalls. While it isn't clear if these units were used, it's fair to assume given the demand.

Because of the federal holiday this week, EIA reported the gas storage numbers this morning instead of Thursday. Frankly, there was nothing to see as the injection was 71 Bcf versus the expected 72 Bcf. The gas market had a nice run as production numbers started to come down and the heat we are experiencing this week was forecasted. As shown in the chart below (Aug futures, as July expires this week), the rally has not been sustainable even as the forecast calls for odds of above average temps and there have been rumblings about some production coming back online.

NOAA WEATHER FORECAST

DAY-AHEAD LMP PRICING & SELECT FUTURES

RTO ATC, PEAK, OFF-PEAK CALENDAR STRIP

DAILY RTO LOAD PROFILES

COMMODITIES PRICING

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