Although complexity is not necessarily a bad thing, it does take a little bit of swotting to understand what is going on…
In this article, we will attempt to translate exactly what all of the wholesale energy market jargon means in an easy to understand, compact fashion.
US hubs and wholesale daily spot price names
Electricity:
| Region | Electricity Hub Name | ICE Electricity Product Name |
| New England | Mass Hub | Nepool MH DA LMP Peak (From 2001) |
| PJM | PJM West | PJM WH Real Time Peak (From 2001) |
| Midwest | Indiana Hub | Indiana Hub RT Peak (From 2006) |
| Texas | ERCOT North | ERCOT North 345KV Peak (From 2014) |
| Northwest | Mid-C | Mid-C Peak (From 2001) |
| Northern California | NP-15 | NP15 EZ Gen DA LMP Peak (From 2009) |
| Southwest | Palo Verde | Palo Verde Peak (From 2001) |
| Southern California | SP-15 | SP15 Gen DA LMP Peak (From 2009) SP-15 Peak (2001 to 2009) |
Gas:
| Natural Gas Hub Name | ICE Natural Gas Product Name |
| Algonquin | Algonquin Citygates |
| TETCO-M3 | TETCO-M3 |
| Chicago Citygates | Chicago Citygates |
| Henry Hub | Henry |
| Malin | Malin |
| PG&E – Citygate | PG&E – Citygate |
| Socal-Ehrenberg | Socal-Ehrenberg |
| Socal-Citygate | Socal-Citygate |
The Intercontinental Exchange (ICE)
For any of the ‘day ahead’ or prompt markets in North American power, the Intercontinental Exchange (ICE) is the main location for any over the counter trading (Often referred to as OTC).
The power indices are from executed transactions on the Intercontinental Exchange platform. The participants of over the counter trading at ICE include some of the largest financial institutions, energy businesses, and other active members of the global commodity markets.
Participants regularly include power stations, refiners, utilities, transportation and chemical companies, hedge funds, banks, as well as other energy and financial industry professionals.
About the Intercontinental Exchange data
For all of the power indices, all qualifying physical firm power contracts traded on ICE from 6AM to 11AM CST on the day of publication are included.
What data is published for each hub?
Price hub:
Location as defined in the ICE Product Guide
Dates:
Both the Trade date and Delivery start and end dates
High price:
This is the absolute high price for the period
Low price:
This is the absolute low price for the period
Wtd avg price:
This is the index of weighted average price
Daily volume:
This is the total contracts traded for the period counting the sell side only
Number of trades:
This is the number of trades confirmed through both ICE and eConfirm that were used in the index calculation
Number of counterparties:
This is the number of companies that participated in the index related transactions
How are the weighted average prices calculated? (Indices)
The following formula is used to create the power indices. Although initially appearing complicated, an explanation will be given for the formula:
I = Σ (P • V) / T
Explanation
I = Volumetric Weighted Average Index Price
P = Price or the premium of individual transaction
V = The volume of individual transaction
∑(P • V) = The sum of each transaction’s price, multiplied by its volume
T = The total volume of all qualifying transactions
As well as the price filters on the ICE trading platform in accordance with their Fair-Trading initiative, some types of trades are held as ‘non-qualifying’. These trades are not included in the indices, and are listed below:
- Any trades that are done between two companies who are owned by the same parent company
- Price basis spread legs – this is any spread trades that are executed on a trading platform and are then converted into two outright prices for trade reporting purposes
- Any consummated deals that are then cancelled or altered by the counterparties before confirmation
- Any trades where counterparties reverse a trade within a two-minute window of the previous transaction
- Any Options trade deals that fall outside of the given time period for each index