More than 340,000 without power after storm; electricity prices mixed in its wake

More than 340,000 electricity customers remained without service Feb. 4 in the path of a winter storm that stretched from Texas to New York, but reliability concerns about the Texas grid abated, and near-term power and natural gas prices in the affected areas were mixed.

Tennessee remained the hardest hit among those affected by the winter storm, with almost 134,000 customers without power as of about 3:30 pm ET, according to the PowerOutage.US website. It was followed by Ohio with 70,667 customers out, New York with 57,409 out, and Pennsylvania with 33,031 out.

Power prices were up for delivery on Feb. 4 in four locations hit hard by the storm, but were mixed for delivery over the weekend and Monday.

The highest among the four was New York Independent System Operator Zone G Hudson Valley at $139.07/MWh, according to the S&P Global Platts price database, up from less than $87/MWh for delivery Feb. 3. As of midafternoon Feb. 4, S&P Global Platts had seen prices on Intercontinental Exchange rallying to about $159.25/MWh for delivery Feb. 5.

Northern New York and much of New England remained under a National Weather Service winter storm warning around 4:30 pm Feb. 4.

The second highest day-ahead price for delivery Feb. 4 was at the Electric Reliability Council of Texas North Hub at $135/MWh, but on Feb. 4, the on-peak price for delivery Feb. 7 had tumbled to about $49.25/MWh on the Intercontinental Exchange, according tp Platts.

In Tennessee's vertically integrated utility market, day-ahead on-peak bilateral indices responded to increased power demand, but not with nearly as much volatility as in unbundled markets, rising to $4.75 to $67/MWh for delivery Feb. 4, according to S&P Global Platts assessments. Assessments for delivery Feb. 7 were not available in time for this article.

Gas markets were similarly mixed, with Platts' assessment of Transco Zone 6 New York up $3.87 to $13.50/MMBtu for delivery Feb. 5-7, Houston Ship Channel gas down 19 cents to $4.88/MMBtu for delivery Feb. 5-7, and the Texas Eastern M3 price, which is important for PJM West markets, up $2.45 to $10.45/MMBtu for delivery Feb. 5-7.

ERCOT reliability concerns

One of the concerns going into the winter storm was whether the ERCOT grid could withstand the cold snap, after the deadly mid-February 2021 winter storm that left about 4 million customers without power, some for days.

In a Feb. 4 press conference, Texas Governor Greg Abbott said, "The Texas power grid is more reliable and resilient than it has ever been, and we are continuing to actively respond to the impact of this winter storm."

Virtually all of the more than 70,000 Texas electricity customers who lost power during the storm did so because of damage to transmission or distribution lines. In the February 2021 storm, most of the power losses were due to generation outages, often related to a lack of natural gas or icing on wind turbines.

Abbott attributed the relatively strong performance of the ERCOT grid during the most recent storm to newly established winterization rules, the availability of alternate fuels, the designation of natural gas facilities as critical infrastructure and a 15% increase in power generation capacity compared with February 2021.

In a news release, the Texas Oil and Gas Association said "keeping the power on enabled technicians to troubleshoot issues on this vast system and keep sufficient volumes of natural gas flowing."

"Onsite, seasonal weatherization techniques include methanol injection, temperature activated pumps, steamer units, equipment shelters, and insulated critical lines and valves," TXOGA said.

Texas storm pricing

During the most recent winter storm, Texas area spot gas and real-time power prices were much less volatile than they were during the mid-February 2022 winter storm.

ERCOT Hub real-time systemwide prices averaged about $25 Jan. 31 through about noon Feb.4, with a low of negative $30.67/MWh and a high of $384.68/MWh. During the mid-February 2022 storm, real-time prices hit the high systemwide cap of $9,000/MWh and stayed there for the duration of the emergency.

Spot gas prices at the Houston Ship Channel averaged $5.322/MMBtu Jan. 31-Feb.4 period and ranged from a low of $4.755/MMBtu on Feb. 1 to a high of $6.16/MMBtu on Feb. 4. During the comparable five-day period of the mid-February 2022 storm, Houston Ship Channel spot gas hit a high of $400/MMBtu on Feb. 17, averaged $199.02/MMBtu over the storm weekdays and had a low of $55.29/MMBtu on that Friday.