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

NCC Report: DOE must develop stronger policy to foster adequate carbon capture and storage

The National Coal Council (NCC) today released a new study in response to a request by Secret...
CASL DOE light water reactors LWR research and development

DOE extends funding for light water reactor research consortium

MHPS to take over thermal power business

Effective April 1, Mitsubishi Hitachi Power Systems (MHPS) will take over the business in the...

Builder projects 18-month delay for nuclear plant in Georgia

Southern Co. (NYSE: SO) said the firms building its new nuclear power plant in Georgia estima...

Alstom to maintain Olkiluoto nuclear island equipment

Alstom was awarded a five-year contract to maintain equipment at the Olkiluoto nuclear power ...
2014 Projects of the Year

Power Engineering Photo of the Day

Capstone Turbine corporation shale oil and gas microturbines Horizon Power Systems

Capstone Turbine Receives Follow-On Order for Fifteen C65s from Horizon Power Systems

Capstone Turbine Corp. received an order for 15 C65 microturbines for shale oil and gas custo...
Yucca Mountain Nevada nuclear spent fuel waste repository DOE application NRC review SER evaluation volumes

NRC publishes last two volumes of Yucca Mountain safety evaluation

The NRC published two more volumes of its safety evaluation on a geologic high-level nuclear ...

Power Engineering Current Issue

01/01/2015
Volume 119, Issue 1
1501pe-cover-lg

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 | 2014 | 2015

Power Industry Wire News

Intergraph(R) Releases PV Elite(R) 2015 With New Modeling Capabilities and Other Productivity Enhancements

Intergraph(R) Releases PV Elite(R) 2015 With New Modeling Capabilities and Other Produc...

Utility Execs Explain How to Centralize Crew Management Before and After Storms

Utility Execs Explain How to Centralize Crew Management Before and After Storms

Con Edison 2016 Rate Plan Cites Reliability, Storm Prep, Better Technology

Con Edison 2016 Rate Plan Cites Reliability, Storm Prep, Better Technology

Diesel Particulate Matter (DPM) Testing Evidences 20% Reduction With Use of CyberFuels Dynamo(TM) Cetane Booster

Diesel Particulate Matter (DPM) Testing Evidences 20% Reduction With Use of CyberFuels ...

Miller Energy Declares Cash Dividends on Its Series B, Series C and Series D Preferred Stock

Miller Energy Declares Cash Dividends on Its Series B, Series C and Series D Preferred ...

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 >>