Power Prices Rise From Washington to Boston as Demand Soars

Jan 03, 2014 3:05 pm ET

Jan. 3 (Bloomberg) -- Spot wholesale electricity prices jumped from the Midwest to the Northeast as low temperatures and heavy snow lifted demand.

Power consumption on the PJM Interconnection LLC network, the largest U.S. grid, rose 6.7 percent to average 116,875 megawatts for the hour ended at 2 p.m. from the same time yesterday, after increasing as much as 13 percent earlier in the day, grid data compiled by Bloomberg show.

The high temperature in Chicago may reach 20 degrees Fahrenheit (minus 7 Celsius), 12 below the historical average, according to AccuWeather Inc. in State College, Pennsylvania. Washington’s high may be 26 degrees, 17 below normal, and Boston’s 13 degrees, 23 lower than the norm.

Temperatures across parts of the Northeast may reach the lowest levels in 20 years or more, said Rob Carolan, owner of Hometown Forecast Services Inc. in Nashua, New Hampshire. After a brief warm-up on Monday, temperatures are expected to drop again on Tuesday and Wednesday, according to forecasters.

Healthy supplies of power kept prices in New England from surging even higher.

“We think the large amount of oil generation is putting a lid on New England prices,” Jesse Fitzmaurice, a Boston-based analyst at energy data provider Genscape Inc., said in an electronic message.

Western Hub

Spot prices at PJM’s benchmark Western hub, which includes Washington, more than doubled to average $98.14 a megawatt-hour for the hour ended at 2 p.m. from the same time yesterday, after rising to $231.24 at 8 a.m., the highest for that period since the average $249.79 on Dec. 6, 2007, grid data show. Prices at the Eastern hub, which includes New Jersey, tripled to average $185.60 a megawatt-hour at 2 p.m.

PJM West on-peak power traded $75.92 below the Eastern hub, compared with a $27.07 discount yesterday and a three-month average discount of $3.63 for PJM West.

New York City prices fell 33 percent to average $167.36 a megawatt-hour for the hour ended at 2 p.m. from the same time yesterday, after rising as high as $933.74 in the 11 a.m. hour when New York-based Consolidated Edison Inc. declared today a minimum oil-burn day, meaning that higher-priced oil-fired plants would have to be run for reliability. The move is common when the utility sees high demand because it doesn’t want to be caught short if there are any supply disruptions.

Boston prices advanced 10 percent to average $208.88 a megawatt-hour at 2 p.m.

New York

New York on-peak power traded $189.54 above Boston, compared with a $47.51 premium yesterday and a three-month average discount of $13.68 for New York.

In the Midwest, spot prices at the Indiana hub, a regional benchmark, jumped 19 percent to average $38.40 a megawatt-hour for the hour ended at 1 p.m. local time from the same period yesterday, the grid data show.

The higher prices came as a powerful snowstorm hit the mid- Atlantic states and the Northeast.

Manhattan’s Central Park received 6 inches (15 centimeters) of snow by 7 a.m., according to the National Weather Service. Boston’s Logan International Airport reported 14.6 inches, said Nicole Belk, a weather service meteorologist in Taunton, Massachusetts.

--With assistance from Brian K. Sullivan in Boston and Naureen S. Malik in New York. Editors: Charlotte Porter, Richard Stubbe