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Zonal Prices and Congestion
The most notable change in the renewed market last week occurred in the West zone. In contrast to most weeks since the renewed market was launched, the West zone experienced high levels of negative congestion in the day-ahead market – even greater than in other typically congested zones such as the Northwest and Northeast. Congestion in the West zone was particularly extreme in the middle of the week, reaching -$38.23/MWh in the day-ahead market. As has been the case in most weeks, the Northeast and Northwest zones experienced moderate congestion in day-ahead. While the Northwest zone saw only negative congestion in the day-ahead market, the Northeast zone produced positive congestion.Note that negative congestion typically means there was a constraint exporting energy from a particular zone, while positive congestion is the opposite. The Northwest and Northeast zones typically post negative congestion in the day-ahead market, as there is often more supply than demand and limited transmission to export it to the major load centres in southern Ontario.
Real-time zonal prices in the Northwest remain volatile, with a mix of positive and negative congestion. Interestingly, the Northwest saw extreme positive and negative congestion on the same day at the end of the week (the hottest day) – moving from -$86/MWh to $123/MWh on the same day.
And in real-time, the West zone saw very negative congestion, whereas in the first six weeks that zone posted extreme positive congestion in a number of hours. The Niagara, West, and Southwest zone observed the same coincident negative congestion ($51.60/MW) on the last day of the week.
Day-Ahead and Real-Time Prices
Real-time prices continue to exhibit much greater volatility than day-ahead prices. There were seven real-time Ontario Zonal Price (OZP) spikes greater than $200/MWh, the highest reaching above $430/MWh. Similar to last week’s review, there were no negative day-ahead or real-time priced hours. There are some hours where the real-time Ontario price is moving from well below the day-ahead price to spikes significantly above it. Most days of the week showed greater convergence between day-ahead and real-time prices than we have seen in previous weeks. Most of the largest price spikes in real-time occurred close to noon (outside the ramping hours that we have highlighted in the past). The highest real-time price hour was at noon as well. Notably, although the last day of the week (June 22) was the hottest and highest demand day of the week, higher real-time price spikes were observed on other days. The current heat wave has resulted in very high real-time prices that will be discussed next week.
OR Prices
Both real-time and day-ahead Operating Reserve (OR) prices remain higher compared to historical averages. The average weekly day-ahead 10S price was $10.77/MW, while it was more than $25.99/MW in real-time. The difference between the day-ahead and real-time 10s price is high at $15.22. OR prices in day-ahead did not see much price spikes with the highest price spike being relatively low (up to about $60/MW).
For every hour of the week, the OR price was below the energy price. In particular, day-ahead OR prices more closely tracked energy prices.
Real-time OR prices were low for several hours of the week with OR prices exhibiting less volatility compared to energy prices.
