PJM: Higher fuel costs drove up Q1 power prices

PJM energy markets are working, though higher prices early this year are largely tied to increases in fuel costs.

According to a new analysis, PJM’s load-weighted average real-time locational marginal price was 13% higher in the first three months of this year, compared with early 2016. Prices averaged $30.28/MWh versus $26.80/MW in Q1 2016.

“Our analysis concludes that the results of the PJM Energy, Capacity and Regulation Markets in the first three months of 2017 were competitive,” Independent Market Monitor Joseph Bowring said in a statement last week.

For gas-fired units, gas prices increased more than energy prices, resulting in lower energy market net revenues for a new combustion turbine and a new combined cycle plant, the most commonly built type of new unit in PJM. In the first three months of 2017, average energy market net revenues decreased by 66% for a new combustion turbine plant 29% for a new combined cycle plant.

For coal and nuclear plants, energy net revenues were higher because of higher energy prices, the report concluded. In the first three months of 2017, average energy market net revenues increased 17% for a new coal plant and 17% for a new nuclear plant.
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