The first quarter of 2015 brought some of the lowest wholesale electric pricing ERCOT has experienced in the last 8 years.
The 12-month strip (zonal average) recently carved out three of its ten lowest daily settlements since 2007. The strip settled at $27.26/MWh on February 5th, $27.37 on January 30th, and $27.40 on February 9th.
The remaining seven lowest periods occurred in Q1 2012, at which time the 12-month strip briefly fell below $27/MWh.
Electric prices in Texas tend to have a strong correlation with NYMEX natural gas, due to the ISO’s gas-heavy generation mix. A record 2014 gas storage injection season combined with a milder winter compared to 2013-2014 has pushed gas costs near the bottom of their two-year trading range.
On the 100 cheapest days for the ERCOT 12-month strip since 2007, the corresponding NYMEX gas strip was trading near or below $3.00/MMBTU. Should the market outlook for natural gas change, expect ERCOT power prices to follow at a similar pace.
On Wednesday, February 18th the ERCOT 12-month strip settled at $28.48/MWh. The NYMEX gas 12-month strip settled at $3.05/MMBTU.
The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.