December 2019

A historic November cold snap sent temperatures below freezing in 75% of the Lower 48 states. Because of this cold snap, the price of natural gas increased from an average of less than $2.00 per million British thermal units (MMBtu) in October to a mid-November high of $5.11/MMBtu at the Tetco M3 hub, located in northeast Pennsylvania in the PJM Interconnection (PJM). Prices rose about $1.00/MMBtu and reached nearly $3.00/MMBtu at the Chicago Citygate hub in the Midcontinent Independent System Operator (MISO). These price increases resulted in coal-fired power generation replacing natural gas-fired generation starting in late October in both of these regional transmission organization markets. In both PJM and MISO, where strong competition exists between natural gas- and coal-fired generation, relative shifts in fuel prices can influence which type of power plant operates.

Throughout all of 2019, natural gas-fired generation has accounted for an increasing share of power generation in PJM and MISO, averaging 35% in PJM and 27% in MISO. This summer, the natural gas market in the Lower 48 states experienced record-high natural gas consumption, relatively low natural gas prices, retirements of coal-fired generation, and increasing natural gas-fired capacity. In October, when regional natural gas prices were particularly low because of moderate autumn temperatures, natural gas-fired generation in MISO reached its highest level for 2019 at 36%. However, as natural gas spot prices in the PJM and MISO regions approached nearly $2.70/MMBtu in late October, the coal-fired generation share increased from its earlier lows.