Spot wholesale power on U.S. mid-Atlantic and New England grids rose to six-day highs as lower temperatures boosted demand to run heaters.
Below-normal temperatures across the PJM Interconnection LLC territory, which stretches from New Jersey into North Carolina and Illinois, will persist over the next seven days while a New England cold snap will moderate at the end of this week, according to WSI Corp. in Andover, Massachusetts. Spot prices for natural gas, a fuel used to produce power, gained at some Northeast and mid-Atlantic hubs yesterday.
PJM’s benchmark Western Hub, which includes prices from Pennsylvania to Washington, climbed $11.40, or 37 percent, to average $42.19 a megawatt-hour from 7 a.m. to 1 p.m. from yesterday’s on-peak average, according to the grid operator. Spot power on the six-state grid from Connecticut to Maine gained $11.70, or 26 percent, to $57.08 a megawatt-hour, ISO New England Inc. data showed. The average prices for both grids were the highest since March 25.
“The weather has been pretty bullish,” said Kyle Cooper, managing partner at IAF Advisors in Houston. “Cooler weather is driving higher natural gas prices. Your incremental electrons still come from natural gas so higher gas spot prices are contributing on the margin to higher power prices.”
The high temperature in Washington today will drop to 53 degrees Fahrenheit (12 Celsius), 9 below normal, after rising to 68 degrees yesterday, 6 above normal, according to AccuWeather Inc. in State College, Pennsylvania. Boston’s high will be 8 below normal at 43 degrees after rising to 62 yesterday, 12 higher than the usual reading.
Electricity usage across PJM has been coming in above yesterday’s forecast. The grid operator predicted peak demand would be 97,097 megawatts at 7:30 a.m. Demand rose as high as 99,461 megawatts 20 minutes later.
ISO New England expects peak demand to reach 16,570 megawatts from 7 p.m. to 8 p.m., up 4.9 percent from yesterday’s high of 15,799 megawatts at during the same hour.
The cost of natural gas typically set the price for power across the U.S.
Spot gas at the Algonquin City Gates, which includes delivery to Boston, rose 36.41 cents, or 5.1 percent, to $7.452 per million British thermal units today on the Intercontinental Exchange. Transcontinental Gas Pipeline’s Zone 6, which runs from the Virginia-Maryland border to Linden, New Jersey, gained 5.4 cents, or 1.2 percent, to $4.414. Prices at both hubs were the highest since March 21 after climbing three straight days.
Gas accounted for 50 percent of the generation in New England as of 1:10 p.m., with 32 percent from nuclear, 9 percent from renewable sources and 7 percent from hydro, data from the grid operator show. Coal generated 1 percent.