OREANDA-NEWS. January 13, 2017. Power plant operators in the 15-state Midcontinent Independent System Operator (MISO) area dispatched more natural gas-fired electricity in November than a year earlier to meet customer needs, despite lower overall power demand.

Gas in November accounted for 22.4pc of the MISO generation fuel mix, up from 20.8pc a year earlier. That implies generation from gas plants rose by 4pc year-over-year to about 10TWh, according to MISO data.

Meanwhile, total electric demand fell by 4pc year-over-year to 44.5TWh amid mild weather. Data from the National Weather Service shows total heating degree days (HDDs), a measure of weather-related energy demand, for the midcontinent region in November was 22pc lower than normal.

Output from coal plants in November fell by 11pc from a year earlier to about 20TWh and output from nuclear units rose 8pc to 7.3TWh, according to MISO data.

Coal, at 44.9pc of the MISO fuel mix, remains the dominant fuel source, but utilities in that region have been increasing their reliance on gas plants because of low prices. Spot gas at Chicago Citygates averaged \\$2.45/mmBtu in November, up by 13pc from November 2015. But Chicago in November averaged a 5?/mmBtu discount to the Henry Hub, flipping from an 8?/mmBtu premium in November 2015 and a 34?/mmBtu premium in November 2014.

Gas prices in the US are mostly up from the year earlier amid production declines, rising exports and increased demand from the power generation sector. The increase at the Chicago hub and other midcontinent markets have lagged the increase at Henry Hub because the midcontinent market gained greater access to supplies from the Marcellus and Utica shales in the northeast US.

The reversal of Rockies Express pipeline (Rex) in zone 3, which went into service on 1 August 2015 with initial capacity of 1.2 Bcf/d (34mn m?/d), has been providing shippers east-to-west capacity to deliver low-cost gas from Appalachian shale production to markets in the midcontinent, including Chicago and Detroit. The pipeline operated at 1.8 Bcf/d in 2016 and on 6 January completed the final phase of zone 3 capacity enhancement project bringing westbound capacity to 2.6 Bcf/d. The availability of more gas and high storage levels should reduce congestion during peak demand in winter and keep a leash on any price rally, according to Schneider Electric commodity analyst Kobe Liu.

Gas inventories at midwest storage sites in the week ended 6 January stood at 865 Bcf, 1.6pc above the five-year average, the US Energy Information Administration said.

Low gas prices should keep gas burn at a high level.

MISO, the second-largest US power market behind PJM, breaks fuel-source information for its region into three distinct zones: MISO north includes Iowa, western Minnesota, Wisconsin, North and South Dakota and eastern Montana; MISO central includes Michigan, eastern Wisconsin, and parts of Illinois, Indiana, Kentucky and Missouri; and MISO southern covers parts of Arkansas, Louisiana, Mississippi and southeast Texas.

In MISO's coal-dominated central region, coal represented 62.2pc of the November fuel mix, down from 67.6pc a year earlier. Gas was used to generate 15.2pc of that region's power, up from 13.9pc a year earlier. Nuclear generation rose to 16.9pc from 12.8pc.

In the south region gas accounted for 62.7pc of electric output in November, marginally higher than a year ago. Coal fell to 13.2pc from 13.9pc. Nuclear generation fell 2.2 percentage points to 19.1pc.

The northern region used coal for 44.9pc of the electric supply in November, marginally higher than the year earlier. Gas-fired generation supplied 4.9pc of the electric demand, which was slightly higher than last year.