An 8-Year Look Back Provides Perspective on Current ERCOT Price Levels

Ben Faulkinberry

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.

Related resources:


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.

No comments yet.

Comment on this post