As the U.S. East Coast Burns, Power Prices FiddleBy and
July spot power in PJM is averaging less than in 2012
New York broils toward fifth-longest heatwave since 1869
As sweltering temperatures push New York City toward its fifth longest heatwave and send Washington and Philadelphia to record highs, power prices are keeping their cool.
Spot, on-peak power at PJM Interconnection LLC’s benchmark Western hub, which includes Washington, has averaged about $36 a megawatt-hour so far this month, down from an average of $65.17 during the first 25 days of July 2012, grid data compiled by Bloomberg show. Average natural gas prices at the hub serving the mid-Atlantic and New York fell 51 percent to $1.51 per million British thermal units during the same period.
While the East Coast copes with its most intense hot weather since 2012, gains in power prices have been subdued, thanks in part to a glut of cheap gas from U.S. shale fields. Power generators are burning more gas than ever and newer plants plants are closer to population centers. Transmission systems have been upgraded and expanded to ease grid bottlenecks.
“If power plants are running and gas supplies are good, prices will be low,” Michael Clendenin, a spokesman for Consolidated Edison Inc. in New York, said in an e-mail Monday.
The worst power market spikes so far are across the Midwest, where spot wholesale power at a benchmark Indiana hub gained $234.96 a megawatt-hour to average $260.06 a megawatt for the hour ended at 11 a.m. on Monday from same time Friday, data from Genscape Inc. showed.
In Boston, which isn’t bearing the brunt of the heat, spot power also jumped 74 percent in the hour ended at 11 a.m. to $41.75 a megawatt-hour amid hot weather and higher gas prices in New England.
For gas futures, the heat wave is already over. With stockpiles at 3.277 trillion cubic feet as of July 15, 21 percent above the five-year average for the period, a surge in air conditioning use has had a limited impact on prices. Gas futures fell in New York Monday, helping to keep wholesale electric rates low.
New York has baked at 90 degrees Fahrenheit (32 Celsius) or higher since July 21 and will remain there through Thursday, the National Weather Service said Monday. The eight days of 90-plus readings would tie for the fifth-longest heat wave in the city since 1869. The longest was 12 days in 1953.
Philadelphia, which is hosting the Democratic national convention, could hit two degrees higher than the old record set in 1899, and Washington could tie a 1930 record of 100 degrees, said Jim Hayes, a meteorologist with the U.S. Weather Prediction Center in College Park, Maryland
“This is a very impressive hot streak for us,” Hayes said. “We’re certainly going to make a run for the record in Philadelphia.”
Heat advisories stretch from western Massachusetts to North Carolina and cover parts of Indiana, Ohio, West Virginia and Kentucky. In Philadelphia, Harrisburg, Pennsylvania and Trenton, New Jersey, excessive heat warnings, meaning temperatures will feel hotter than 100 degrees, are in place through the afternoon. PJM is asking generators and transmission owners to delay planned work.
Monday will be the hottest day of the week across much of the eastern U.S. as readings gradually drop through Friday, Hayes said. New York’s high should come Tuesday.
Across the contiguous 48 states, the U.S. is on track for its third hottest July since 2000 in terms of cooling degree days, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland.
Cooling degree days are a way of measuring the weather’s impact on energy consumption. The value is calculated by subtracting a base of 65 degrees from the daily average temperature.