Cal-ISO under excessive heat warning due to above-normal temperatures

The California Independent System Operator is under an excessive heat warning through June 1 with peakload forecast to peak above 33 GW as prices jumped 73% day on day.

The warning is in effect from noon May 30 to 8pm PT June 1 for the Sacramento Valley and adjacent foothills. While the ISO anticipated increased electrical demand over the Memorial Day weekend due to temperatures 10-20 degrees above normal, officials also projected sufficient electricity to serve the anticipated spike in demand, according to a May 29 statement.

"Electric grid conditions are stable today, and we are forecasting sufficient energy to cover demand through the hot weather," according to an automatic email from the ISO June 1. "We are not planning to issue a Flex Alert at this time, and we are not anticipating any disruption of service or rotating power outages. We are monitoring weather and grid conditions closely and will provide updates if conditions change."

Temperatures in the Central Valley were forecast to be 10-20 degrees warmer-than-normal May 30 through June 1, as May 30 peakload came in 3.6% below forecast as May 31 peakload was 1.1% below the forecast even as it reached a year-to-date high of 31.645 MW, according to ISO data. Peakload was forecast to reach 33.3 GW June 1 and 33.9 GW June 2.

Sacramento temperatures were forecast to reach 98 degrees June 1, 11 degrees above normal, according to CustomWeather.

Prices jump on higher temperatures

The high temperatures drove up spot prices.

SP15 on-peak day-ahead locational marginal prices climbed 73% day on day to the mid-$60s/MWh for June 1 delivery, according to ISO data. SP15 on-peak day-ahead jumped 15.5% to the mid-$70s/MWh for June 2 delivery on the Intercontinental Exchange. In comparison, SP15 on-peak day-ahead LMP averaged in the mid-$20s/MWh for May and in the low-$20s/MWh in June 2020, according to ISO data.

SP15 on-peak June rolled off the curve at $47.05/MWh, 94.4% higher than where the 2020 package rolled off the curve, according to S&P Global Platts data. Likewise, NP15 on-peak June rolled off the curve at $49.26/MWh, 92% higher than where the 2020 package ended.

In northern California, NP15 on-peak day-ahead LMP climbed 61% day on day to the low-$70s/MWh for June 1 delivery, according to ISO data. NP15 on-peak day-ahead traded in the mid-$80s/MWh for June 2 delivery on the Intercontinental Exchange, which would be a jump of 14% day on day.

Natural gas spot prices for SoCal city-gate jumped 35% day on day to $4.715/MMBtu for June 1 delivery, according to Platts pricing data. SoCal city-gate rose 3.3% to $4.8778/MMbtu for June 2 delivery on ICE. In comparison, SoCal spot gas prices averaged $3.3326/MMBtu in May and $1.887/MMBtu in June 2020.

SoCal June rolled off the curve at $3.409/MMBtu, 107% higher than where the 2020 contract ended, according to Platts data.

2020 heatwave, outages

The ISO committed to better prepare the public for possible stressed grid conditions caused by excessive heat following the extreme heat events in 2020 that led to back-to-back days of rotating outages during a weeklong heatwave.

SP15 on-peak day-ahead LMP reached a record high of $697.91/MWh Aug. 18.

Concerns of a hot summer combined with a weak hydro outlook and less imports during period of high demand have driven up forward prices to record levels.