Heat Rate Trades

[Dan Williamson]

Curious if someone has a breakdown on how heat rate trades are structured. Obviously there is a NG component and elect component. How does one determine the ratio of gas to power. My understanding is that in the summer and winter one might use a 1 or 1.25 gas day vs say 0.50 gas day in the shoulder months. Could someone enlighten me? I'm new at this. I'm looking primarily at the MISO and PJM Markets in the US.

Thanks.

 

[billdineen]

Curious if someone has a breakdown on how heat rate trades are structured. Obviously there is a NG component and elect component. How does one determine the ratio of gas to power. My understanding is that in the summer and winter one might use a 1 or 1.25 gas day vs say 0.50 gas day in the shoulder months. Could someone enlighten me? I'm new at this. I'm looking primarily at the MISO and PJM Markets in the US.

Thanks.

PJM West trades as HH NG + M3, although most power traders are fine trading it as a spread to Henry Hub only. This is how they trade in the OTC market. They trade at the same spread year round.