Jan. 28 (Bloomberg) -- Spot wholesale electricity prices jumped in the mid-Atlantic states to the highest level in four days and also rose in Texas as frigid weather that brought ice, sleet and snow lifted power consumption.
Power use on the PJM Interconnection LLC network, the largest U.S. grid, rose 16 percent to average 127,745 megawatts during the hour ended at 1 p.m. from the same time yesterday, grid data compiled by Bloomberg show.
The high temperature today in Washington may reach 21 degrees Fahrenheit (minus 6 Celsius), a 33-degree drop from yesterday and 23 below average, according to AccuWeather Inc. in State College, Pennsylvania.
Spot prices at PJM’s benchmark Western hub, which includes deliveries to Washington, rose almost fivefold to average $165.05 a megawatt-hour for the hour ended at 1 p.m. from the same time yesterday, the grid data show. That’s the highest price for the hour since it reached $205.25 on Jan. 25. Prices at the Eastern hub, which includes New Jersey, jumped more than fivefold to average $275.40, the highest price for the hour since it reached $301.08 on Jan. 24.
“It’s been wild, especially in the Northeast,” said Eric Bickel, a commodity analyst at Schneider Electric in Louisville, Kentucky. “It’s reflective of the frigid temperatures and the snow on the ground. You are seeing those generation costs just skyrocket in recent days.”
Gains in turn are being driven higher by increases in costs for natural gas, a fuel used to generate electricity, along the East Coast, Bickel said.
PJM West on-peak power traded $95.42 below the Eastern hub, compared with a discount of $18.51 yesterday and a three-month average discount of $9.96 for PJM West.
New York City prices advanced 36 percent to average $280.95 a megawatt-hour at 1 p.m., while Boston prices gained 17 percent to average $255.53.
New York on-peak power traded $81.96 above Boston, compared with a premium of $5.67 yesterday and a three-month average discount of $12.08 for New York.
The cold weather extended to Texas, where prices at the North hub, which includes Dallas, jumped 72 percent to average $46.26 a megawatt-hour for the hour ended at noon local time. Houston hub prices rose 67 percent to average $44.97.
“You are seeing a domino effect where cold weather begets high heating demand begets high generation costs,” Bickel said. “Now you are seeing that effect on the power side.”
The high temperature today in Houston, where ice and sleet was expected, may reach 39 degrees, 25 below normal, AccuWeather said on its website.
“The pricing reaction we are seeing is in anticipation of the rest of the week,” Bickel said. “You are seeing end users going out there purchasing up gas contracts to make sure they have enough to meet their own demand.”
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