Energy Management

Why Are Power Prices in Western New York Rising?

3 min read

New York power forwards are still sitting close to all-time lows set earlier this year. As gas continues to play a larger role in New York’s power generation mix, power prices in New York have grown increasingly correlated to lower gas prices – which have been sustained as a result of the oversupply situation we find ourselves in. Gas storage levels are abundant, gas prices have remained low, and many supply and demand fundamentals are looking bearish as we move further into spring.

But there is an outlier. Since March 1, power prices in Western New York (Zone A) have started to rebound.


  • Prices for the 2017 calendar strip are trading 10 percent higher than all-time lows set earlier this year. Prices for 2018 and 2019 are 6 percent higher.
  • Year-over-year prices are lower than last year, but to a much lower extent than other zones (7 percent versus 20 percent in all other zones)




Why Prices Are Rising In Zone A

Local generation mitigating from the grid has started to take its toll. Two coal plants in the area helped keep a lid on prices in zone A, and as of early this year, they have been retired. Dunkirk went off the grid in January 2016, and Huntley went off the grid in March 2016. The price impact, especially from Huntley, was seen immediately.

Beyond contributing 436 MW of generation, Huntley also served as local congestion relief. Because the area operates and relies on transmitting power through an old set of 230 kV lines, there are contingency risks for overloading the system with power from hydro and imports that cause congestion pricing. Huntley alleviated some of this congestion by running at the load end of the 230 kV system and supplying power flowing directly into the Buffalo city center.

As illustrated in the below chart, prices spiked immediately following the plant’s closure, even breaking above the winter price high, despite mild March weather. Moving through April, prices have continued to climb – even on the heels of moderate temperatures and minimal heating/cooling demand. In fact, the average RTC DA LBMP price so far this month is 75 percent higher than the average February price. It’s not a typical scenario to see shoulder month prices escalate well beyond winter prices.


While there are upgrades to the 320 kV system in the works, they aren’t slated to be completed until this summer. And there’s still the question of how much small improvements can make up for nearly 450 MW of lost power generation.

More Potential for Higher Prices Due to Closures

To add to the mix, NRG’s Fitzpatrick nuclear facility (882 MW; Zone C) will be closing in late 2016/early 2017 at the end of its current fuel cycle. This base load closure could have similar impacts to pricing in Western New York as well. We’ve already seen impacts to ROS capacity prices in the subsequent months following NRG’s initial announcement. Furthermore, the fate several other units in Zone C remain unclear. Should additional generation be migrated from the grid, we may face even greater price and congestion risks – and New York State gradually becomes less and less fuel diverse.

What This Means for Business Owners

It’s unlikely we will see any near-term price alleviation in this area. While the market has started to price the current situation into the power forwards, they are still a good value relative to what is likely to be a quite bullish future for West New York.

Contact us today to learn more about protecting your business from possible future volatility.

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