Power Prices Jump in Texas as Frigid Weather Boosts Demand

Jan 24, 2014 3:54 pm ET

Jan. 24 (Bloomberg) -- Spot wholesale electricity prices soared in Texas as an ice storm backed by a blast of cold air lifted demand above expectations.

Cold weather also increased prices in the mid-Atlantic and Northeast regions, which forecasters said may stay cold through early February. In Houston, a warm-up is expected tomorrow.

Power use on the Electric Reliability Council of Texas Inc. network, grid operator for most of the state, averaged 48,073 megawatts during the hour ended at 2 p.m. local time, 10 percent more than the day-ahead forecast of 43,624 megawatts, Ercot’s website showed.

The high temperature today in Houston may reach 38 degrees Fahrenheit (3 Celsius), 25 below yesterday, according to AccuWeather Inc. in State College, Pennsylvania. Tomorrow’s high in Houston is projected to be 60 degrees.

Spot prices at the Texas North hub, which includes Dallas, and at the Houston hub advanced 41 percent to average $37.77 a megawatt-hour for the hour ended at 2 p.m. from the same time yesterday, grid data compiled by Bloomberg show.

In the mid-Atlantic region, the 13-state PJM Interconnection LLC network, which serves more than 60 million people, asked users in a news release yesterday to conserve power today. It said prolonged, extremely cold weather is causing high power demand and the grid is managing a tight power supply as a result.

PJM reduced voltage in the Baltimore Gas and Electric Co. and Potomac Electric Power Co., or Pepco, utility zones at 7:26 a.m. today, a move to ease demand on the system. It also issued a maximum generation alert, saying that any PJM capacity resources that are offline may be called upon as necessary.

PJM West

Spot prices at PJM’s benchmark Western hub, which includes deliveries to Washington, reversed earlier gains and declined 44 percent to average $225.70 a megawatt-hour for the hour ended at 3 p.m. New York time from the same time yesterday, the grid data show. Prices at the Eastern hub, which includes New Jersey, slid 65 percent to average $238.14 a megawatt-hour.

PJM West on-peak power traded $20.34 below the Eastern hub, compared with a $156.43 discount yesterday and a three-month average discount of $8.48 for PJM West.

New York City spot prices declined 40 percent to average $262.10 a megawatt-hour at 3 p.m., while Boston prices gained 12 percent to $248.99.

New York on-peak power traded $38.35 above Boston, compared with a $51.82 premium yesterday and a three-month average discount of $12.84 for New York.

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