NYISO contract volume has seen a dramatic increase over the first four months of 2013 according to data from the Intercontinental Exchange (ICE). The jump is the result of greater volatility relative to 2012, driven by natural gas pricing this winter and a change in how NYISO models the electric system.
This winter saw unusually high demand for gas and exposed a lack of pipeline capacity in the Northeast. Although these effects were felt most heavily in New England, which is the furthest region downstream from major natural gas sources, eastern New York faced the same set of conditions. That created an extended period of volatility which has drawn interest and can be seen in the increase in trading volumes at Zone G (Hudson Valley) during the winter months.
Zone A (West) has also seen a large increase in volume year-over-year, but for entirely different reasons. Last May the NYISO announced that a reliability issue in Western NY would now be addressed using congestion to create a financial incentive for generation, rather than via what is known as an out of market solution. This new modeling method combined with the mothballing of older coal-fired units in the area has drawn significant interest from traders at Zone A and will continue to throughout the summer.
Data on ICE trading volume can be found at the link below, and by choosing ‘Indices,’ then ‘ICE Futures U.S.,’ then ‘North American Power’.
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