In a monthly update published Nov. 24 for client, Bernstein Research said it sees continued weak forward prices for coal, natural gas and electric power in many areas.
The 2016 forward price strip for natural gas at Henry Hub fell by 6% over the last month, the firm said. While the average 2016 forward price for Central Appalachian coal remained roughly stable (down 2%), Powder River Basin (PRB) forward prices for 2016 fell by 14%, according to Bernstein.
Power prices fell by 4-7% in PJM, resulting in 2016 spark and dark spread contraction, Bernstein said. By contrast, 2016 power prices fell only slightly in Midcontinent Independent System Operator (MISO) and Electric Reliability Council of Texas (ERCOT) areas, while gas prices and PRB coal prices fell, driving spark and dark spread expansion.
Implied heat rates are now well above historical averages in PJM, MISO and ERCOT, Bernstein said.
The report was directed by Bernstein Senior Analyst Hugh Wynne. Bernstein Research and Sanford C. Bernstein are affiliated with Alliance Bernstein. Bernstein is a major global investment-management and research firm. The firm’s website indicates that Bernstein has 46 locations in 21 countries. It also has major offices in New York and London.