Blasting Air Conditioners Raise Power Prices as U.S. East Broils

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Cooling Off in Central Park
Boys play around a sprinkler in Manhattan's Central Park as temperatures soar. Photo Credit: Naureen S. Malik

Sweltering heat will boost electricity consumption on eastern U.S. grids to the highest this summer as people crank up their air conditioners to keep cool.

The Northeast and mid-Atlantic states will see hot and humid weather through Thursday, said WSI Corp. New York City’s high may reach 96 degrees (36 Celsius) Wednesday, 12 degrees above normal, in the second day of a projected eight-day heat wave, according to AccuWeather Inc. Wholesale power prices for the city rose to a two-month high.

Power grids serving New England, New York and the mid-Atlantic region all say demand will surge Wednesday. New York City’s Metropolitan Transportation Authority plans to cut power consumption at more than two dozen bus depots this afternoon. PJM Interconnection LLC, which manages the mid-Atlantic grid serving more than 61 million people, issued a hot weather alert for Wednesday and Thursday, asking power plants and transmission owners to defer maintenance work.

PJM estimates that demand on its 13-state grid will peak at 145,781 megawatts, a seasonal high.

“The forecasted demand for today would be the highest of this summer so far,” Ray Dotter, a spokesman for PJM, said in an e-mail. “PJM Interconnection does not expect transmission grid problems.”

Grid manager ISO New England Inc. sees demand reaching 24,600 megawatts this afternoon, the most this year, spokeswoman Ellen Foley, based in Holyoke, Massachusetts, said in an e-mail.

Price Reaction

Anticipation for increased power consumption boosted prices. Most power supplies are secured the previous day in what is known as the day-ahead market. Spot prices can fluctuate the following day based on changes in grid conditions.

Day-ahead prices for PJM’s benchmark Western hub jumped as high as $190.49 a megawatt-hour covering the hour ending at 5 p.m. Wednesday, the most for any hour since March 6. New York City prices rose as high as $103.53, the most since May 12, while power in Boston increased to $94.75.

The grids are currently operating under normal conditions, according to their websites.

The New York Independent System Operator Inc. is forecasting that consumers will use as much as 32,100 megawatts across the state, topping this summer’s high of 30,575 megawatts reached on July 20, Kenneth Klapp, a spokesman for the operator, said in an e-mail.

Consolidated Edison Inc. declared Wednesday a minimum oil burn day, an alert that prompts higher-cost generators in the city to turn on units so they can meet rising demand, according to the New York ISO’s website.

New York

The New York MTA, which operates the city’s subways and buses, will cut demand by almost 13.6 megawatts from noon to 6 p.m. and in return will receive a payment of $25 per kilowatt of reduced demand from the New York Power Authority. There are 1,000 kilowatts in a megawatt, and one megawatt is enough to supply 800 to 1,000 typical U.S. homes.

New York City power will be even more expensive Thursday with hourly day-ahead prices jumping to $113 a megawatt-hour.

The South is also baking. In Texas, demand may jump to a record July high for a second day in a row. Consumption peaked at 66,827 megawatts Tuesday in the hour ended at 5 p.m. local time, and the Electric Reliability Council of Texas Inc.’s sees this afternoon’s high jumping to 67,882 megawatts.

Houston’s temperature will climb to 101 degrees, 8 above average, and the highs will stay above 100 through Aug. 4, said AccuWeather. Readings in the city stayed below 100 last year.

Southern Swelter

Demand is on track to soar to all-time highs on the grid serving Mississippi, Louisiana, Arkansas, Missouri and an eastern sliver of Texas, Andy Schonert, a spokesman for the Midcontinental Independent System Operator Inc., said in an e-mail. Power in the southern part of MISO’s grid may reach 31,985 megawatts, which would topple the record of 31,789 set on Aug. 3, 2011, he said. The broader grid, which spans the Midwest and Canada’s Manitoba province, rose to a 2015 high of 120,015 megawatts on Tuesday.

The California grid is anticipating hot weather and high demand Wednesday and Thursday. The California Independent System Operator Corp. issued an alert asking market participants to restrict maintenance on both days from 7 a.m. through 10 p.m.

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