Dive Brief:
- Historically low gas prices and continued mild weather pushed power prices in the PJM market to 15-year lows, Platts reports from a PJM Members Committee webinar this week.
- Load-weighted LMPs averaged $22.97 last month, and officials said there has never been a year since the pricing scheme was created in 1999 when prices averaged lower than $30/MWh.
- Those findings mirror Federal Energy Regulatory Commission's State of the Markets report, released earlier this month, which concluded wholesale power prices were down 27% to 35% across the nation last year compared with 2014.
Dive Insight:
Cheap gas and mild weather have sent power prices down broadly, but in PJM, the persistent decline means the market is now below 15-year lows, Platts reports.
LMPs in March averaged $22.97/MWh, compared with $25.95/MWh in February and $42 in March 2015. Heating and cooling degree days came in at less than 400 in March, compared with an average of 550. And historically low gas prices have helped keep power bills low, with no abatement to production in sight.
Low gas prices, which would typically depress production, have not had that effect. "Marcellus and Utica natural gas production, the primary source of all new U.S. production, reached record levels in 2015," FERC said in its recent market report.
Production growth in the Marcellus and Utica has resulted in the addition of 51 billion cubic feet per day in new pipeline capacity, FERC said, and approximately 49 Bcf/d of capacity is proposed or planned to come online by 2018 to transport natural gas to markets. Natural gas storage levels reached a record high 4 trillion cubic feet in November, and that was despite starting the refill season below the five-year average.
FERC said the 2,469 Bcf net injection in 2015 was second only to 2014’s record 2,746 Bcf net injection.