Texas Power Drops as Warmer Weather Cuts Demand Below Forecast

Feb 14, 2014 4:51 pm ET

Feb. 14 (Bloomberg) -- Spot wholesale electricity prices fell in Texas as demand was below expectations while wind generation exceeded forecasts.

Power use on the Electric Reliability Council of Texas Inc. network grid averaged 33,160 megawatts for the hour ended at 2 p.m. local time, a 4.4 percent decrease from the day-ahead forecast, according to Ercot’s website.

The high temperature today in Houston may reach 76 degrees Fahrenheit (24 Celsius), 14 above yesterday and 10 higher than the historical average, according to AccuWeather Inc. in State College, Pennsylvania.

Spot power at the North hub slid $5.13, or 18 percent, to average $23.01 a megawatt-hour during the hour ended at 2 p.m. local time from the same time yesterday, while Houston hub prices declined $2.32, or 8.2 percent, to average $25.82, grid data compiled by Bloomberg show.

Wind generation averaged 7,845 megawatts at 1 p.m., 73 percent more than the day-ahead forecast, data on Ercot’s website showed.

Prices also declined from the mid-Atlantic to the Northeast as higher temperatures moved into the region following days of frigid weather.

“Demand is likely falling today as people stay off the roads and schools remain closed in the Northeast,” said Eric Bickel, a commodity analyst at Schneider Electric in Louisville, Kentucky. “It’s also a long weekend with the federal holiday on Monday, but typically demand is at its seasonal trough this time of year.”

Markets will be closed on Feb. 17 for Presidents Day.

Boston Prices

Spot power in Boston slid $51.89, or 24 percent, to average $161.40 a megawatt-hour for the hour ended at 3 p.m. New York time from the same time yesterday. In New York, spot prices reversed earlier declines and rose $75.32, or 90 percent, to average $158.96.

New York on-peak power traded $70.87 below Boston, compared with a discount of $55.81 yesterday and a three-month average discount of $17.95 for New York.

At PJM Interconnection LLC’s benchmark Western hub, which includes Washington, spot power fell $11.51, or 23 percent, to average $38 at 3 p.m., while prices at the Eastern hub, which includes New Jersey, declined $75.99, or 66 percent, to average $39.55.

PJM West on-peak power traded $22.86 below the Eastern hub, compared with a discount of $46.36 yesterday and a three-month average discount of $12.72 for PJM West.

--With assistance from Christine Buurma in New York. Editors: Bill Banker, Charlotte Porter