US Northeast power demand, prices rise as wintry weather persists across region

Northeast US wholesale power prices have remained elevated as wintry weather continues to drive up demand in parts of that region, including the PJM Interconnection, which kept in place a cold weather alert for its Western region through the rest of the business week.

"Temperatures are expected to reach the single digits in PJM's Western Region during the Jan. 8-10 period, which will drive up the demand for electricity in that area," the grid operator said in its Jan. 6 update concerning the alert.

A cold weather alert is a routine procedure PJM issues in advance of significantly cold weather conditions anticipated for some or all of its service territory, the grid operator said in a statement. The alert was issued three days after PJM issued a cold weather advisory for the Western region, with an effective period of Jan. 8-12.

PJM's seven-day peakload forecast anticipated that demand would rise to around 127 GW Jan. 8 and 133.5 GW Jan. 9, up about 2% and 7%, respectively, over expected demand of 124.7 GW Jan. 7. Peakload for Jan. 10 is forecast at 129.7 GW.

For comparison, PJM's peakload has averaged 113 GW so far this month after averaging 105.5 GW in December. PJM's all-time winter peakload is 143.295 GW, set Feb. 20, 2015.

Population-weighted temperatures for PJM's footprint were forecast to average 23.7 degrees Fahrenheit Jan. 8-10, CustomWeather data shows. Population-weighted temperatures across PJM for the same period in January have normally averaged about 35 F.

Power market impact

In response to the winter weather, PJM West Hub on-peak day-ahead power for Jan. 8 delivery jumped $17 to trade near $83.25/MWh on the Intercontinental Exchange, while the corresponding off-peak contract saw an offer at $79.75/MWh, up from the previous day's settlement near $64.50/MWh. AEP Dayton Hub on-peak day-ahead for Jan. 8 delivery likewise jumped $7.50 to trade near $59.50/MWh.

In neighboring New York Independent System Operator, day-ahead on-peak locational marginal prices for Jan. 8 delivery in Zone J NYC and Zone G Hudson Valley settled in the lower $160s/MWh, up about $1 on the day, and off-peak prices saw increases of more than $10, reaching the upper $130s/MWh.

In ISO New England, the Mass Hub on-peak price for Jan. 8 delivery increased by about $13.75 from its previous ICE settlement, reaching nearly $160/MWh. The corresponding off-peak price increased about $7 on the day, pricing around $147/MWh. Looking ahead, the Mass Hub balance-of-the-week for Jan. 9-10 delivery was valued at around $140/MWh, slipping from the previous price of $156/MWh.

NYISO forecast its peakload to rise 1.6% to about 22.2 GW Jan. 8, while ISO-NE expects its peakload to increase by a similar percentage to 19.1 GW.

Gas prices

The cold weather has supported natural gas prices in PJM's Western region to some extent, but the proximity to gas supply in Appalachia has likely prevented any significant spikes.

The spot price at the Lebanon Hub in southwest Ohio was assessed at an 11-month high of $4.01/MMBtu for Jan. 7 flows, easing slightly to $3.78/MMBtu for Jan. 8 flows, according to data from Platts, part of S&P Global Commodity Insights.

Gas prices were much higher further east in the PJM area. The Transco Zone 5 North rose to more than $13/MMBtu for Jan. 8, while Transco Zone 6 non-NY was almost $12/MMBtu, Platts data showed.