Lower gas prices send US Northeast power prices down

By the OGJ Online Staff

HOUSTON, Nov. 6, 2001 — Winter electricity prices in the US Northeast and the West will be lower than last year's prices, reflecting lower natural gas prices, analysts said.

"The power story for the next 3 months is that prices will definitely be lower in 2001, compared to 2000 levels," said Kristin Dall, power practice manager for Energy Security Analysis Inc., Boston.

ESAI's forecast indicates New England Power Pool (Nepool) power prices should average no more than 60% of real-time levels observed last year for the period. Dall said forward markets put a $9/Mw-hr premium on November and December prices. But she expects prices to have fallen by the end of December.

Within PJM Interconnection LLC, Dall said November and December on-peak power prices should average $8/Mw-hr or 20% less than in the same period a year ago.

For the New York Control Area, ESAI forecasts that Zone J-New York City power prices will be 30-40% less than last year, while the marginal cost of power at the New York Power Pool reference bus will be no more than 50-70% of last year's prices.

In the Western System Coordinating Council, Dall said suboptimal hydro conditions could boost power prices above current levels of $30-$40/Mw-hr, but ESAI doesn't foresee a repeat of last winter's volatile western power prices due to lower natural gas prices, additional capacity, and a $91.87/Mw-hr price cap imposed by the Federal Energy Regulatory Commission.

"I can't imagine them getting near the cap," Dall said.

Reduced fuel switching
Last winter, when spot gas prices spiked to double digits and fuel oil prices slumped, power plants with dual gas/heavy fuel oil capacity switched to oil from gas. This year, with gas prices way down, much of that dual-fired power plant gas demand will return to natural gas, ESAI predicted.

ESAI estimated there is about 60,000 Mw of "true" dual-fired capacity in the US, mostly in the Northeast and Florida. ESAI distinguishes "true" dual-fired capacity from plants that use residual fuel capability as simply an emergency backup rather than as a means to optimize fuel costs. About two-thirds of this capacity is still owned by public utilities and one-third by nonutilities, according to ESAI.

Last December and January every gas-fired power plant with oil burning capability had an incentive to switch to oil when spot gas prices topped $10/MMbtu and fuel oil prices averaged $4/MMbtu. This year, ESAI said the price differential is not as compelling for switching. Gas prices are projected to average $4/MMbtu at the gateway to the Northeast (Transco Zone 6), while New York Harbor 1% fuel oil prices are expected to be $3-$3.30/MMbtu during the peak winter months, ESAI indicated.

"We expect that some of the power plant natural gas demand which deserted last winter will return and that with adequate supplies of natural gas this winter, the price of natural gas — particularly in the Northeast — might be mitigated by the prices of low-sulfur fuel oil," says Mary Menino, manager of ESAI's Natural Gas practice.

Sponsored by FLSmidth

Related Articles

Wisconsin Electric gets no bids to buy Presque Isle coal plant

Wisconsin Electric Power hasn't gotten any purchase bids at this point off a recent request for proposals (RFP) that it issued for the coal-fired Presque Isle power plant in Michigan's Upper Peninsula.

Gas, renewables account for new generation additions in February

Basin Electric Power Cooperative has commissioned its 45-MW Pioneer 2 peaking unit in North Dakota and it was the largest conventional peaking plant to come online during February as renewables accounted for the rest of the new generation.

Follow Power Engineering on Twitter
Latest News
Plant Vogtle construction costs down in first half 2015

Plant Vogtle nuclear expansion spending down in first half of 2015

Georgia Power said in a report that the utility estimates it will spend less on construction ...
Renewable energy developer Cypress Creek Renewables building 2 utility-scale solar farms in South Carolina

Renewable energy developer Cypress Creek Renewables building 2 utility-scale solar farms in South Carolina

Cypress Creek Renewables is investing more than $20 million in new projects in South Carolina.
The Nuclear Regulatory Commission on Thursday cited a

US regulators, Millstone nuke plant settle dispute

The parent company of Connecticut's nuclear plant and federal regulators have reached a settl...
Duke Energy is looking to bring 53 MW of utility-scale solar capacity to the company’s South Carolina service areas by the end of 2016.

Duke Energy launching solar-generating program for South Carolina customers

Duke Energy is looking to bring 53 MW of utility-scale solar capacity to the company’s South ...
The state Department of Natural Resources says historic amounts of oil and natural gas are being produced by Ohio shale wells.

State says Ohio oil, natural gas production at historic high

The state Department of Natural Resources says historic amounts of oil and natural gas are be...
MidAmerican Energy says it will build its next two wind farms in northwest Iowa.

MidAmerican Energy building Iowa wind farms for $900 million

MidAmerican Energy says it will build its next two wind farms in northwest Iowa.

Semprius, Inc. awarded $2.9 million to develop low-cost, solar-generated electricity

Semprius awarded $2.9 million from ARPA-E to develop hybrid solar technology

Semprius, Inc., an innovator in high concentration photovoltaic (HCPV) solar modules, has bee...
08/26 Henry Hub Average Natural Gas Spot Prices

08/26 Henry Hub Average Natural Gas Spot Prices

The Henry Hub is the pricing point for natural gas futures contracts traded on the New York M...

Power Engineering Current Issue

03/01/2014
Volume 118, Issue 3
1403PE-cover
Products Showcase
Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Power Industry Wire News

PyroGenesis Canada Inc. to Present at the 4th Annual Liolios Gateway Conference on September 10, 2015

PyroGenesis Canada Inc. to Present at the 4th Annual Liolios Gateway Conference on Sept...

American Power Group Announces Completion of a $3.25 Million Term Loan for the Purchase of Next Generation Natural Gas Flare Capture and Recovery Systems

American Power Group Announces Completion of a $3.25 Million Term Loan for the Purchase...

Anpath Group Signs Merger Agreement With Q2Power

Anpath Group Signs Merger Agreement With Q2Power

Cimation Selected by Shell for Global Cybersecurity Program Roll-Out

Cimation Selected by Shell for Global Cybersecurity Program Roll-Out

Nuclear, LNG Export Projects Dominate Top 10 Capital-Spending Plans in U.S. Southeast Region, an Industrial Info News Alert

Nuclear, LNG Export Projects Dominate Top 10 Capital-Spending Plans in U.S. Southeast R...

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>