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Power Rates Increase with the Warmer Weather

Power Rates at some PJM Interconnection pricing hubs climbed by nearly 70% year over year in July, as natural gas prices more than doubled from a year ago and Power demand increased by 7.2 percent month over month. According to PJM data published by S&P Global Platts, PJM East Hub day-ahead off-peak locational marginal electricity costs grew by 69.7% from July 2020 to average $25.60/MWh in July 2021.

In July, day-ahead off-peak prices at the hub jumped by 25.9% month over month. The AEP-Dayton Hub had the highest average electricity costs in July, with day-ahead on-peak prices averaging $43.05/MWh, up 41.4 percent from July 2020 and 13.3 percent higher than June. In July, day-ahead on-peak electricity prices at the PJM West Hub averaged $42.39/MWh, up 37.8 percent from July 2020 and 18 percent higher than June.

Power Rates Increase with the Warmer WeatherIn July, Chicago city-gate spot natural gas prices averaged $3.61/MMBtu, up 115.8% from July 2020, when the hub’s gas prices averaged $1.67/MMBtu. In July, city-gate gas prices in Chicago were 15.5 percent higher than the previous month. In July, Platts Texas Eastern M-3 gas prices were up 91.2 percent from the previous year, averaging $3.25/MMBtu. In July, gas prices at the hub were 28.1 percent higher than the previous month.

PJM peak load averaged 124,441 MW in July, up 7.2 percent from June but down 6.7 percent from July 2020, when it averaged 133,428 MW, owing to hotter weather despite coronavirus pandemic lockdown consequences that reduced Power demand. In July, the average high temperature in the PJM footprint was 84.3 degrees Fahrenheit, up from 82.5 degrees Fahrenheit in June. The higher temperatures resulted in a higher number of cooling degree days in July, which averaged 10.9 compared to 8.7 in June. In July 2020, the average high temperature was 87.9 degrees Fahrenheit, with cooling degree days averaging 14.2 percent.

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