Eastern U.S. Spot Power Jumps as Heat Boosts Cooling Demand

Sep 02, 2014 4:09 pm ET

Sept. 2 (Bloomberg) -- Spot wholesale electricity along much of the U.S. East Coast surged six-fold or more as higher- than-normal temperatures ramped up demand for air conditioning.

Power consumption on the New York state grid touched 29,620 megawatts at 2 p.m., surpassing the highest daily peak demand for the entire summer, Boston-based power analyst for Genscape Inc. Stefan Baden said in an e-mail.

Consumers used more power than projected in the Northeast and mid-Atlantic grids as PJM Interconnection LLC, which serves more than 61 million people in 13 states, expects demand to jump to a six-week high. ISO New England Inc. issued an alert about an existing or possible abnormal condition on the six-state region.

The high temperature in Boston today was projected to be 91 degrees Fahrenheit (33 Celsius), 14 above normal, while Manhattan’s reading will jump to 92, 12 higher than average, according to AccuWeather Inc. in State College, Pennsylvania. Washington will rise to 97, 13 above average.

“It’s definitely all related to heat,” said Tom Hahn, vice president of U.S. power derivatives at brokerage ICAP Energy LLC in Durham, North Carolina. “It’s been a cooler-than- normal summer but going into fall now people weren’t necessarily expecting this type of weather and we are seeing that reflected in prices.”

New York City power jumped $164.34 to $196.62 a megawatt- hour during the hour ended at 2 p.m. from the same time Aug. 29 while prices at PJM’s benchmark Western hub, which includes Washington, advanced $30.39, or 89 percent, to $64.37, grid data compiled by Bloomberg show.

Spot power for the hub serving Boston and Northeast Massachusetts surged more than 20-fold from the comparable period on Aug. 29 to reach $491.99 a megawatt-hour.

Texas Wind

Power consumption in Manhattan and its four neighboring boroughs rose to 10,472 megawatts at 2 p.m., 6.6 percent higher than the day-ahead outlook for the hour, according to the New York Independent System Operator Inc.’s website.

PJM, which manages the grid from the mid-Atlantic states to the Midwest, expects demand to reach 137,024 megawatts, which would the highest peak since July 22.

Prices slumped in Texas amid higher-than-forecast wind generation. Turbines produced 4,080 megawatts in the hour ended at 1 p.m. local time, as compared to the 2,252 megawatts projected for the period, according to the Electric Reliability Council of Texas Inc., which manages most of the state’s power.

Power at Ercot’s North hub, which serves Dallas, fell $1.18, or 2.8 percent, to $40.70 at 1 p.m. from the same time on Aug. 29.

The Texas grid said it expects to have enough generating capacity to meet peak demand in the fall.

Ercot projects that it will have more than 75,500 megawatts of capacity on the system, exceeding projected peak demand for the season of 48,700 megawatts.