Peak Loads for Summer 2022
Brakey Energy provides email and text alerts in advance of potential Capacity and Transmission Coincident Peaks (CPs) to those clients that elect to receive them. As of July 25, 2022, Brakey Energy has issued eight Capacity CP alerts, six FirstEnergy (FE) Transmission CP alerts, and four American Electric Power-Ohio (AEP) CP alerts for Summer 2022.
Capacity CPs occur during the five one-hour intervals when demand on the PJM regional grid is at its highest. Transmission CPs for FE customers occur during the five one-hour intervals when demand on FE’s zonal grid is at its highest. The Transmission CP for AEP customers occurs during the one-hour interval when demand on AEP’s zonal grid is at its highest.
The tables below list PJM’s and FE’s five highest loads and AEP’s single highest load this year, as well as the day and time of each occurrence. This is based on preliminary data.
Table 1: Five Highest Loads for PJM through July 26, 2022
Table 2: Five Highest Loads for FE through July 26, 2022
Table 3: Single Highest Load for AEP through July 26, 2022
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP and 5CP for PJM will be 148,237 MW and 145,070 MW, respectively. Three of PJM’s top five peak loads to date have fallen within this range. With all of August and September yet to come, it is likely one or more of the loads shown in Table 1 will be displaced.
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP and 5CP for FE would register at 12,606 MW and 12,125 MW, respectively. All five of FE’s top peak loads to date have fallen in or above this range. We believe it likely that most – if not all – of the loads on Table 2 will end up being FE Transmission CPs come year’s end.
In our 2022 Coincident Peak Forecasting Report, we forecasted that the 1CP for AEP would register at 22,306 MW. The highest load to date comes within 597 MW of this forecasted peak. Heavy curtailment in the AEP zone during days when Brakey Energy issued AEP Transmission CP and PJM Capacity CP alerts drastically impacted metered peak loads on those days. As a result, AEP’s single highest load to date occurred on a day when no Transmission or Capacity CP alerts were issued. However, with all of August and September yet to come, we think it more likely than not that the load in Table 3 will be displaced.
Brakey Energy will continue to monitor weather and load forecasts and will issue alerts to participating clients when warranted. If you are a Brakey Energy client that has not signed up for these alerts but would like to, please email Catherine Nickoson.
The highly competitive generation offers we highlighted in the past for residential customers have long disappeared. We are now recommending customers with expiring contracts default to the SSO until likely May 2023. The SSO rate varies by electric distribution utility but is likely below current market conditions. To the extent you are in an expiring contract, make sure you provide notice to your supplier that you would like to default back to the SSO as to avoid being swept up in an extremely expensive holdover provision.
Brakey Energy has long and often found defaulting to distribution utilities’ Standard Choice Offer (SCO) a prudent strategy for natural gas supply. We encourage our readers to employ this strategy if they are comfortable riding the highly volatile natural gas market. Despite the runup in natural gas prices, we are seeing the SCO produce better pricing than many other competitive offers.
Natural Gas Market Update
The NYMEX price for July settled at $6.551 per Million British Thermal Units (MMBtu) on June 28, 2022. This price is down 26.5% from June’s price of $8.908 per MMBtu. This settlement price is used to calculate July gas supply costs for customers that contract for a NYMEX-based index gas product.
The graph below shows the year-over-year monthly NYMEX settlement prices for 2018, 2019, 2020, 2021, and 2022 to-date. Prices shown are in dollars per MMBtu of natural gas. Natural gas prices decreased for July partially in response to an increase in domestic supply following an explosion at the Freeport Liquified Natural Gas terminal in June. The facility will likely remain off-line for several months.
Figure 1: NYMEX Monthly Natural Gas Settlement Prices
Figure 2 below shows the historical July 26, 2020 through July 26, 2022 Around the Clock (ATC) forward NYMEX natural gas prices in dollars per MMBtu for calendar years 2023, 2024, 2025, 2026, 2027, and the 12-month strip price of August 2022 through July 2023 (labeled “Custom Strip” in the graph below). Forward natural gas prices have rebounded sharply following a dramatic drop in late June.
Figure 2: ATC Calendar Year and 12-Month Strip NYMEX Natural Gas Prices
*Pricing courtesy of Direct Energy Business.
Electricity Market Update
Figure 3 below shows the historical July 26, 2020 through July 26, 2022 ATC forward power prices in dollars per Megawatt hour (MWh) for calendar years 2023, 2024, 2025, 2026, 2027, and the 12-month strip price of August 2022 through July 2023 (labeled “Custom Strip” in the graph below) for the AD Hub. Forward power prices for the 12-month strip and calendar year 2023 are continuing to trade at extreme premiums relative to outlier years. Power prices continue to follow the natural gas market.
Figure 3: ATC Calendar Year and 12-Month Strip Power Prices for the AD Hub
*Pricing courtesy of Direct Energy Business.