US Northeast power, gas prices rise on scorching temperatures

US Northeast power, gas prices trended higher Aug. 11 as the third heat wave of 2021 hit the region.

Mass Hub day-ahead on-peak prices jumped double digits day on day on the Intercontinental Exchange to trade around $102.25/MWh, rising to its highest level since late June, when the region saw similar weather conditions. The corresponding balance of the week traded just slightly lower, around $97/MWh.

In comparison, the day-ahead contract averaged $44.40/MWh month-to-date and $27.13/MWh in August 2020, according to the S&P Global Platts data.

Real-time locational marginal prices were also elevated Aug. 11, trading in the mid-$100s/MWh across the board as of 4 pm ET.

In NYISO, Zone J NYC on-peak rose about $6.25 to trade near $65.25/MWh, and Zone G Hudson Valley climbed about $7.26 to trade at $71.75/MWh, also the highest prices since the June heat wave.

Demand, temperatures

Power prices rallied, with much of the Northeast under excessive heat warnings and heat advisories through Aug. 13, according to the US National Weather Service. In some areas, the temperatures were expected to reach triple digits Aug. 12-13 before receding slightly over the weekend.

In Boston and New York City, high temperatures were predicted to trend in the lower to mid-90s F over the next couple of days, more than 10 F above average, according to CustomWeather.

Following the weather, ISO New England demand was forecast to reach 24.35 GW Aug. 12 and 24 GW Aug. 13, according to system operator data. The forecast for Aug. 12 was the highest since June 30.

NYISO demand was expected to peak at 30.46 GW, making this the strongest forecast since Aug. 29, 2018. Demand expectations for Aug. 13 stood slightly lower at 29.84 GW, according to NYISO data.

Natural gas prices

Due to the rise in temperatures, Transco Zone 6 NY cash gas prices jumped to a near six-month high $4.093/MMBtu for next-day deliveries Aug. 11, which was the highest mark since $7.055/MMBtu Feb. 19 when a winter freeze affected several parts of the US.

In the Boston area, Algonquin Gas Transmission city-gates rose to $4.852/MMBtu on Aug. 11, its third-highest level in the last five months, only below $5.145/MMBtu and $4.855/MMBtu on June 29 and June 28, respectively. Since July 29, Algonquin city-gates have jumped $2.01, while prices at Transco Zone 6 NY have increased $1.26.

Along with the warmer weather, total Northeast demand has steadily climbed to reach 17.45 Bcf/d Aug. 11, up from 16.95 Bcf/d in the prior day, according to S&P Global Platts Analytics. Demand has jumped by 3.74 Bcf/d since the beginning of August and has seen nine day-on-day increases in the last 11 days. Gas demand in the Northeast is expected to climb another 1.09 Bcf/d Aug. 12, according to Platts Analytics.