How fuel prices feed generator bids
Commodity price inputs set the marginal fuel costs that drive thermal bid curves and, in turn, locational marginal prices. Each unit’s bid reflects its heat rate applied to delivered fuel price plus any carbon cost, with tax credits where applicable.
Natural gas
Natural gas prices blend a near-term market signal with a long-term outlook, then add a locational delivery premium for each part of the footprint:
- Near-term years are priced from the Henry Hub natural gas forward curve, using a trailing average of traded futures settlements by delivery month.
- Later years follow the EIA Annual Energy Outlook long-term projection (2025 vintage), expanded to a monthly profile using the seasonal shape implied by the futures curve.
- Locational delivery premiums are applied by gas hub to convert the Henry Hub benchmark into a delivered price across SPP. Five regional hubs are used, each mapped to the zones it supplies:
| Gas hub | Region served |
|---|---|
| Panhandle Eastern | Texas panhandle and western/central Oklahoma |
| NGPL Mid-Continent | Central Kansas and western Missouri |
| Southern Star | Eastern Oklahoma and the Arkansas/Missouri border |
| Northern Natural (Demarcation) | Nebraska and the upper Great Plains |
| Northwest Pipeline / CIG | Rockies, serving the western zones |
The delivery premiums are calibrated to historical delivered gas costs from EIA-923. Where a year is priced from the futures curve, the full premium is added on top of the Henry Hub strip; where a year is priced from the long-term outlook, only the premium’s monthly shape is applied, because the outlook already reports delivered regional prices.
| Input | Source | Link |
|---|---|---|
| Henry Hub forward curve | CME NG Futures | CME |
| Long-term gas price outlook | EIA Annual Energy Outlook | EIA AEO |
| Delivered gas cost calibration | EIA-923 | EIA-923 |
Coal
The SPP fleet burns predominantly Powder River Basin coal. Each coal plant is anchored to its own realized delivered cost from recent EIA-923 receipts, in real 2024 dollars, and held roughly flat in real terms over the forecast. The regional EIA Annual Energy Outlook trend can shade the level down but not up, and a delivered-price floor guards against unrealistically low values in later years. Because the anchor is plant-specific, delivered coal cost is not uniform across the footprint: plants nearer the Powder River Basin burn materially cheaper coal than those further south.
Other fuels
Default delivered prices are used for fuels without reported market data, including nuclear fuel, biomass, and byproduct gases.
Carbon
No carbon price applies in the SPP footprint: there is no regional cap-and-trade program and no state carbon price, so the carbon cost component of each unit’s bid is zero.
Data sources
| Source | Description | Link |
|---|---|---|
| CME NG Futures | Henry Hub natural gas forward curve | CME |
| EIA AEO | Long-term fuel price projections | EIA AEO |
| EIA-923 | Plant-level fuel receipts (gas delivery premiums, coal basis, minor fuels) | EIA-923 |