By Tom Kleckner
SPP’s energy prices and average hourly load this summer were below 2018 levels, while generator outages and congestion both increased, the RTO’s Market Monitoring Unit said in a recent report.
The MMU’s quarterly market report for the summer months (June-August) showed the average day-ahead price was $23.02/MWh and the average real-time price was $22.32/MWh during the period, a 10% decrease from the previous summer’s prices. The $1.54/MMBtu average gas price at the Panhandle Eastern pipeline was a 35% drop from the 2018 summer average of $2.35/MMBtu.
Prices were highest in the southeast portion of SPP’s footprint, northwest Kansas and South Dakota. Prices were lowest around the Kansas-Oklahoma border and in the northwest region of the footprint.
At the same time, the average hourly load was down 3% to nearly 35 GWh, from just under 36 GWh in 2018. Cooling degree days, used to estimate the effect of actual weather conditions on energy consumption, fell 9% from 2018 to 2019.
The MMU devoted the report’s “special issues” section to the continued increase in generation outages. SPP saw a monthly average of 26,000 GWh in total generation outages this summer, a marked increase from just two years ago, when outages averaged around 17,000 GWh.
“A central tenet of SPP is that ‘reliability and economics are inseparable,’” the Monitor said. “Economic incentives should drive behavior that increases reliability. However, circumstances exist that are not promoting reliability through economic incentives.”
The report focuses on maintenance outages for the first eight months of the year, which increased from 35,000 GWh in 2017 to 45,000 GWh in 2019. Maintenance outages are generally taking longer than previously, which indicates there may not be as much incentive as before to quickly complete maintenance outages, the MMU said. With low gas prices, “it has been necessary for gas resources to take outages to perform maintenance previously completed when the resource was offline,” the Monitor said.
The large number of outages led SPP to declare a Level 1 energy emergency alert in August. (See SPP Shortfall Leads to Scarcity Pricing Calls.)
Congestion was up during the summer, with 35% of all pricing intervals showing a breach in which the load on a flowgate exceeds the effective limit. Load-serving entities earned $80 million in congestion payments and were able to fully cover their $70 million in congestion costs through the congestion-hedging market.
Coal-fired resources’ percentage of total generation continued to fall, down from 50% in summer 2017 to 36% this summer. The increase of wind generation and gas generation (because of low gas prices) has made up the difference.
The MMU has scheduled a web conference for Nov. 8 at 2 p.m. to discuss the report.
