Eastern U.S. Spot Power Drops on Mild Weather, Lower Natural GasNaureen S. Malik
Spot wholesale electricity fell across the eastern U.S. grids as unusually mild weather crimped demand and local gas prices dropped to record seasonal lows.
Prices on the 13-state network operated by PJM Interconnection LLC, serving more than 61 million people from Washington to Chicago, were heading to a one-month low as peak power demand in the region fell 6.1 percent from yesterday. Washington’s high temperature today will be 47 degrees Fahrenheit (8 Celsius), 2 above normal, while Boston will reach 48, 9 higher than usual, according to AccuWeather Inc.
The cost of generating electricity fell with this week’s plunge in natural gas prices. Spot prices in parts of the mid-Atlantic region slid below $1 per million British thermal units for the first time while hubs serving New York and Boston saw seasonal lows, according to Intercontinental Exchange data.
PJM’S benchmark Western hub, which includes Washington, fell $2.08, or 7 percent, to $27.55 a megawatt-hour in the hour ended at 3 p.m. from the same time yesterday, according to grid data compiled by Bloomberg. Spot on-peak prices so far today were down 22 percent to $28.82, heading for the lowest daily average since Nov. 24.
“We’re seeing seeing some significant weakness in PJM with above-seasonal temperatures and weak natural gas pricing, which is driving weaker spot prices,” said Rhodri Williams, senior market analyst with Genscape Inc. in Boston.
Spot gas at Dominion Resource Inc.’s South Point pool, which includes two lines that run through parts of Ohio, Pennsylvania and West Virginia, tumbled 23 percent to 94.61 cents per million Btu on the Intercontinental Exchange, an all-time low in data going back to 2001.
PJM expected demand on its grid to peak at 103,714 megawatts later today, down 6.1 percent from yesterday’s high, according to its website.
Dominion shut its North Anna 1 reactor in Virginia late yesterday to identify the source of a leak found “while performing a containment walkdown” and to conduct repairs, according to a report submitted to the U.S. Nuclear Regulatory Commission. The unit, about 40 miles (64 kilometers) northwest of Richmond, has a nameplate capacity of 980 megawatts, Energy Information Administration data show.
The unexpected shutdown “hasn’t been sufficient to drive volatility, as cheaper gas pricing means that PJM can readily dispatch gas units to mitigate the loss of the cheaper nuclear unit,” Williams said.
Gas for delivery to Transco Zone 6 for New York City declined 46 percent today to $1.6232 per million Btu on ICE while Algonquin City Gates, which includes Boston, dropped 29 percent to $2.2478. Those were the lowest prices for the time of the year in ICE data going back to 2004.
Spot power in New York City fell $11.09, or 35 percent, to $20.47 a megawatt-hour in the hour ended at 3 p.m. from a day earlier. On-peak prices were down 31 percent at $21.31, heading for the lowest daily average since Oct. 29. Demand in the city was coming in below the grid operator’s forecasts.
In New England, the hub serving Boston and Northeast Massachusetts dropped $13.31, or 42 percent, to $18.24. Spot on-peak prices were down 46 percent at $20.11, the least since Aug. 15.