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Power Surges in New England Market on Higher Natural Gas Prices

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New England wholesale power jumped after cold weather sent spot prices for natural gas to an 11-month high and generation increased from oil-fired units.

Gas for delivery Thursday at the Algonquin City Gates, which includes Boston, climbed $2.82 to $19.28 per million British thermal units in trading Wednesday on the Intercontinental Exchange, the highest since March 14. The price of the power plant fuel for delivery Friday fell to $18.16.

Oil-fired plants across the New England grid generated 1,915 megawatts, or 13 percent of the system’s power supply, at 11:54 a.m., up from 8.3 percent a day earlier, according to ISO New England Inc., which manages the six-state grid.

The low temperature in Boston on Thursday was forecast to be 10 degrees Fahrenheit (minus 12 Celsius), 14 below normal, while New York City’s may be 8 degrees, 20 less than usual, according to AccuWeather Inc. of State College, Pennsylvania.

“From the higher amounts of oil currently present in the supply stack, it is apparent that additional units are running on oil,” Lindsey Cohen, a Boston-based power analyst at Genscape Inc. who covers the New England market, said in an e-mail. “The most likely candidate for this is Mystic, running their only unit that can operate on oil” as they await a shipment of liquefied natural gas.

Power plants running on oil and those capable of operating on oil and natural gas supplied 5.2 percent of the electricity that was generated in the New England market in 2014, according to ISO New England.

Boston Hub

Spot wholesale power for the benchmark hub for Boston and Northeast Massachusetts gained $8.37, or 8.4 percent, to average $108.14 a megawatt-hour during the hour ended at 4 p.m. from the same time a day earlier, grid data compiled by Bloomberg showed.

Wholesale power also advanced in New York City amid a jump in natural gas. Spot gas at the Transco Zone 6 hub rose 35 percent to $20.29 per million Btu in trading on the Intercontinental Exchange on Thursday, reaching the highest level since March 12.

Power in Manhattan and its four neighboring boroughs climbed $32.51, or 38 percent, to average $117.26 a megawatt-hour for the period.

Average on-peak power in Boston traded $23.51 above New York, widening from a $10.57 premium on Wednesday and compared with a three-month average premium of $10.55.

Oil was priced at a discount to natural gas in New York. Fuel oil with 0.3 percent sulfur delivered in New York Harbor was $9.88 per million Btu cheaper than natural gas at the Transco Zone 6 hub Thursday, according to data compiled by Bloomberg.

About 79 percent of New York City’s generating capacity can swap between two different sources of fuel, versus 47 percent across the state, Consolidated Edison Inc., the city’s utility, said in a Sept. 17 presentation using data from the New York Independent System Operator Inc.