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PJM Interconnection wholesale power prices were mixed in March and down sharply from the same month a year ago while spot natural gas prices dropped around 37% on month and 50% on year, and power demand declined on month as temperatures rose heading into spring.

On-peak power prices at PJM Western Hub are projected to average around $47.60/MWh in 2023, down from $56/MWh in January's outlook, according to S&P Global Commodity Insights power market analysts.

"The natural gas price curve for 2023 has been revised downward as the market now appears likely to be well-supplied throughout the year," the analysts said in their latest North American Electricity Short-term Outlook. "As a result, the PJM Western Hub price curve has shifted down by roughly 10% for 2023, relative to our previous short-term outlook," the analysts said.

Forward power, gas prices

PJM West Hub on-peak forward power prices for April averaged $35.99/MWh in March trading, which was about 36% below the $56.56/MWh average price from a year ago, according to Platts M2MS data. The April package was down 4.83% on the month. Forward power at the hub for May averaged $38.70/MWh, down about 35% on the year and down around 4% on the month, and forward prices for June averaged $44.32/MWh, down about 27% on the year and down almost 1% on the month.

AEP-Dayton Hub on-peak forward power prices for April averaged $32.42/MWh during March trading, down around 35% on the year and 3% on the month. Forward power prices for May averaged $38.90/MWh, down about 34% on the year and 4% on the month, and forward power for June averaged $44.78/MWh, down roughly 26% on the year and flat on the month.

Northern Illinois Hub on-peak power prices for April averaged $29.70/MWh in March trading, a decrease of about 37% on the year and around 6% on the month. Forward power prices at the hub for May averaged $32.30/MWh, a roughly 26% decline on the year and flat on the month.

Platts Transco Zone 6 Non-New York forward gas prices averaged $2.11/MMBtu in March trading, down about 50% on the year and down around 4% on the month. Forward gas prices for May averaged $2.14/MMBtu, which was also a decline of about 50% on the year and 4% on the month, and forward gas prices for June averaged $2.37/MMBtu, a roughly 46% decline on year and down about 3% on the month.

Power generation fuel mix

Coal-fired power accounted for 15.1% of PJM's March fuel mix, up from 14.4% in February and down from 18.4% in March 2022, when gas prices were significantly higher, according to ISO data.

Gas-fired power accounted for 42.8% of the March generation mix, essentially unchanged from 42.7% in February, but up from 38.3% in March 2022.

Nuclear power supplied 32.5% of PJM's generation mix in March, down from 33.7% in February and 33.6% in March 2022.

Hydropower accounted for 2% of the fuel mix in March, up from 1.8% in February and down from 2.5% in March 2022. Wind power accounted for 5.4% of the fuel mix in March, relatively unchanged from 5.5% in February and up slightly from 5.2% in March 2022.

Spot power, gas price dynamics

"On-peak power prices at the PJM Western Hub continued their tumble in March owing to lower natural gas prices and weaker electricity demand," the S&P Global analysts said.

PJM Western Hub on-peak day-ahead power prices averaged $30.43/MWh in March, down nearly 37% on the year and down about 11% on the month, according to ISO data. On-peak real-time prices at the hub averaged $28.84/MWh, a decrease of 37% on the year and an increase of around 9% on the month.

Northern Illinois Hub on-peak day-ahead power prices averaged 24.88/MWh in March, which was down about 39% on the year and down roughly 7% on the month.

AEP-Dayton Hub on-peak day-ahead power prices averaged $30.10/MWh in March, down about 36% on the year and up around 2% on the month.

PJM East Hub on-peak day-ahead power prices averaged $25.48/MWh in March, a decline of about 41% on the year and down almost 24% on the month.

Texas Eastern gas prices averaged $2.23/MWh in March, down about 50% on the year and down around 37% on the month, according to Platts price assessments.

PJM power demand declined 2.9% on month in March with peakload averaging 95,583 MW compared with an average of 98,409 MW in February, according to ISO data. Average peakload climbed 1% on the year.

Power demand softened with higher temperatures, which were above average in March. The average March temperature across the PJM footprint was 43.8 degrees Fahrenheit compared with a historical average of 43.2 F, according to CustomWeather data.

The higher temperatures decreased the average heating degree days to 20.7 in March from 23.0 in February.