Northeast Power Prices Surge on Cold Snap, Higher Fuel Prices
Wholesale electricity prices surged from New York to Maine as freezing weather spurred demand while heating-fuel costs increased.
Real-time peak power in New York City climbed to the highest level in at least eight years on the spot market while prices in New England rose to an 18-month high, according to grid operators. Below-normal temperatures that swept into the regions at the start of this week dropped further today, according to AccuWeather Inc. in State College, Pennsylvania.
Prices for natural gas to be delivered today in Manhattan and Boston rose to five-year highs on the Intercontinental Exchange, boosting costs for power generation.
“Judging from how firm power prices look here, it’s a little bit colder than people were expecting,” said Tom Hahn, vice president of U.S. power derivatives at brokerage ICAP Energy LLC in Durham, North Carolina. “These are the highest prices we’ve seen in a while.”
Real-time on-peak wholesale power in New York City averaged $494.65 a megawatt-hour as of 1:14 p.m., heading for the highest average for any day since at least January 2005, according to New York Independent System Operator Inc. data compiled by Bloomberg. On-peak hours are between 7 a.m. and 11 p.m., according to the grid operator.
New England averaged $222.69 a megawatt-hour as of 1:16 p.m., heading for the highest daily on-peak average since July 22, 2011, according to ISO New England Inc. data compiled by Bloomberg.
The temperature in Manhattan was 16 degrees Fahrenheit (minus 9 Celsius) at 1:17 p.m., down from the average low for the day of 27 degrees, AccuWeather said. Boston was at 15 degrees versus the normal low of 22 for the day.
Demand in New York City may peak at 7,246 megawatts in the hour starting at 5 p.m., NYISO data show. Power consumption peaked at 7,423 megawatts at 6:05 p.m. yesterday, 4.8 percent higher than the forecast for the day.
Total demand across the New York state grid will be close to 24,000 megawatts today, about 9,000 megawatts below summer peak demand, said Kenneth Klapp, a spokesman for the grid operator in Rensselaer, New York. “That’s high,” he said. Electricity consumption is highest during the summer because of air-conditioner use.
Power demand from Maine to Connecticut was 18,500 megawatts as of 12:10 p.m. and may peak at 20,800 megawatts at 6:30 p.m. today, according to ISO New England Inc. Consumption yesterday peaked at 19,817 megawatts.
Klapp and Lacey Ryan, a spokeswoman for ISO New England in Holyoke, Massachusetts, both said power prices during this cold snap are also being driven higher by generation costs.
Spot gas at the Algonquin City Gates for delivery today to locations including Boston rose $8.8285 per million Btu, or 71 percent, to $21.2106 in trading yesterday on the Intercontinental Exchange. Iroquois Zone 2 gas outside of New York City rose $9.8214, or 81 percent, to $21.9988. Both prices were the highest since January 2008.
Gas-fired plants accounted for 50 percent of the generation in New England as of noon today, according to ISO New England.
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