Southwest Power Pool wholesale power prices reached 17-month highs in July as multiple peakload records were set during a heat wave, while coal-fired generation eased, and power forwards continued to climb.
SPP set peakload records five times in July. The record, reached July 19, currently stands at 53.243 GW, when Oklahoma City temperatures rose to a record 110 degrees Fahrenheit, according to the US National Weather Service.
Peakload averaged 48.346 GW in July, a 10.5% year-on-year jump, according to SPP data. Population-weight temperatures across SPP's footprint averaged 82.34 degrees Fahrenheit, up 4.4% from last year, as heating degree days averaged 26% higher than July 2021 and 10.3% higher than normal, according to CustomWeather data.
Fuel mix changes
As demand soared, coal-fired power generation dropped. Coal remained the lead fuel source in July at 39.5% of the total fuel mix, even as it fell 6 percentage points year on year, according to SPP data.
Natural gas-fired power filled in the gap, accounting for nearly 29% of the mix, up 4.2 points from a year ago and a 7.8 point month-on-month increase, as wind-powered generation made up 24.4% of the fuel mix, an increase of 4.2% year on year, but a drop of 7 points month on month, according to SPP data.
Total generation grew 12.6% from July 2021 to an average 40.456 GW, according to SPP data.
Increased cooling demand from the heat wave drove up spot prices.
SPP South Hub on-peak day-ahead locational marginal prices averaged $119.31/MWh in July, a jump of 156.7% year on year, as prices reached as high as $151.29/MWh July 8, a 17-month high, according to SPP data. South Hub on-peak real-time LMP reached a high of $168.31/MWh July 18, a one-month high.
Spot gas process at Panhandle Texas-Oklahoma averaged $6.637/MMBtu, 91% higher year over year, but a drop of 7% from June, according to S&P Global Commodity Insights pricing data. Prices fell as low as $5.285/MMBtu July 7, a three-month low.
Forwards curve
SPP South Hub on-peak August rolled off the curve at $122.80/MWh, 157% above where the 2021 package ended, according to S&P Global Commodity Insights data. The August 2022 package reached a high of $139.10/MWh July 18.
Down the curve, on-peak September is currently around $93.50/MWh, 133% above where its 2021 counterpart was a year ago, while the October package is about $77/MWh, 155% higher. The September package has fallen more than $18 since a package high of $111.75/MWh was reached July 26, while the October package is down $9 from a package high of $95.95/MWh reached May 3.
Power forwards followed higher gas forwards.
Panhandle Texas-Oklahoma August rolled off the curve at $8.087/MMBtu, 118% higher than its 2021 counterpart, as the September contract is currently around $7.593/MMBtu, 111% above where the 2021 contract was a year ago, while the October contract is around $7.605/MMBtu, 114% higher.
The three-month outlook indicates greater chances for above-normal temperatures across the SPP footprint, according to the US National Weather Service.