October’s weighted average Power Pool price is currently at $35.42/MWh, virtually unchanged from last week’s month-to-date settle of $35.27/MWh. Electricity demand remains depressed due to moderate temperatures, which has stabilized Power Pool prices throughout the month. Sundance 4, a 406MW coal-fired generator, is currently offline but not causing any price spikes thanks to low demand. Power Pool prices should remain stable until November when temperatures will be much colder.
Alberta forward contract prices for calendar year 2020 also remain unchanged from last week. Currently, CAL 2020 7×24 and 7×16 blocks are trading at approximately $59.00/MWh and $70.65/MWh respectively.
The month-to-date weighted average Hourly Ontario Energy Price (HOEP) is currently 0.7¢/kWh, as we pass the halfway point of October. Falling temperatures, coupled with heightened periods of precipitation in the province, have caused the average HOEP to dip to its lowest rate for this calendar year. Expensive natural gas-burning generators have produced their lowest output for 2019, dropping from 420MW to an average of ~280MW (-33.9%) this past week. Demand for the province has fallen to 13,400MW (-2.4%), with supply also taking a dip to 15,600MW (-0.6%). Hydroelectric (-3.8%), solar power (-4.7%) and biofuel (-10.3%) are all down on output compared to last week’s supply, with nuclear generation (+0.2%) and wind turbine generation (+14.4%) filling in the gaps at an average combined hourly output of 12,000MW. With natural gas-fired generation at its lowest point in 2019, and cheap/clean renewables like wind and nuclear rising in utilization, an extremely low HOEP will be the norm. Unfortunately, this indicates that a high Global Adjustment (used to bridge the revenue gap for most generators) will be seen for next month’s 1st estimate, unless it has already been accounted for in October’s estimate of $178.8/MWh. Currently, with the first Global Adjustment estimate of 17.9¢/kWh, October’s total market price is settling at 18.6¢/kWh.
– Grace Wilton, Energy Services Analyst