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    Weather, Cheap Gas Cut US Power Prices


A new series of forecasts shows short-term downward trends at US power hubs.

by: William Powell

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Weather, Cheap Gas Cut US Power Prices

US power prices are set to fall this year relative to last year in most regions as the weather was milder and gas has been cheaper, according to the US Energy Information Administration (EIA). It has started forecasting trends of wholesale power prices at a range of hubs in 11 regions of the Lower 48 states.

Beginning with the August 6 edition of the Short-Term Energy Outlook (STEO), EIA expects average wholesale electricity prices in 2019 to be lower than last year in most regions. The largest forecast declines in wholesale electricity prices are in Texas and New England.

The EIA sees the biggest drop in the Ercot North hub in Texas, where prices are forecast to fall by 28% in 2019 to an annual average of $30/MWh. Based on weather forecasts developed by the National Oceanic and Atmospheric Administration, EIA expects relatively milder summer weather in Texas to lead to lower summer electricity demand in ERCOT.

Wholesale prices at the New England Independent System Operator’s (ISO-NE) Internal hub have historically been the highest in the US, but EIA forecasts its wholesale price in 2019 will decline 25% to an average of $37/MWh. More LNG imported into the region have helped moderate natural gas prices. The EIA expects this will keep wholesale electricity prices relatively low in 2019.

In the west, EIA forecasts 2019 prices at the California Independent System Operator (CAISO) SP-15 hub in California and the Palo Verde hub in the Southwest to be about 22% lower than the average 2018 prices. Natural gas prices in the Pacific Northwest spiked earlier in 2019, along with electricity prices at the Mid-Columbia hub on the Washington-Oregon border, as result of pipeline constraints in British Columbia. EIA expects the average annual electricity price at Mid-Columbia to be relatively unchanged from last year.