US power prices surge, operators prepare systems as winter storm approaches

Wholesale power prices surged on Jan. 23 as grid operators in the path of the major winter storm issued additional notices to prepare for days-long freezing temperatures with long-duration power outages possible.

The US National Weather Service's Weather Prediction Center warned of catastrophic ice accumulation from the southern plains to the southeast.

"Widespread freezing rain and sleet are expected across the Southern Plains, the Lower Mississippi Valley, the Tennessee Valley, and the Southeast," according to the weather service. "The storm will cause significant to locally catastrophic ice accumulations with the potential for long-duration power outages, extensive tree damage, and extremely dangerous or impassable travel conditions."

Utilities prepare

Ice is the main concern for utilities, as it can damage equipment and cause roadway delays for crews working to restore power.

Crews from 27 states and Canada arrived in Duke Energy's service territory on Jan. 23 and were being stationed at more than 20 locations, spokesperson Jeff Brooks said. Combined with in-state crews, the utility has 18,000 line and tree workers ready to respond.

"These crews are being strategically placed," Brooks said about Jan. 23 prep work, adding that crews can then respond as needed once the need arises.

The main concern is ice accumulation, because a quarter inch of ice can bring down tree limbs, while a half an inch can cause power lines to sag and equipment to break, leading to power outages, Brooks said. Some areas could get up to an inch of ice. Major transmission lines, which are larger than neighborhood power lines, can sustain more ice, he said.

"Several days of very cold weather is expected," Brooks said. "This isn't just going to melt and go away quickly."

The ice could make roads inaccessible for crews, so customers should be prepared to sustain themselves for up to three days, he added about preparing for the worst.

Entergy, which serves 3 million customers in Arkansas, Louisiana, Mississippi and Texas, said power restoration may take longer due to icy conditions that can delay crews.

"We use a methodical and calculated process in bringing customers back online after an outage in very cold weather, regardless of whether the initial cause of the outage was specifically weather-related," Entergy said in a statement. "Rather than simply energizing an entire power line all at once, we must bring customers back online one section at a time to avoid damaging our system and making the situation worse."

ERCOT outlook

Extreme temperatures are pushing up heating demand, with three grid operators forecast to break all-time winter peakload records, which is driving up power prices across much of the US.

The Electric Reliability Council of Texas forecast peakload to reach 83.804 gigawatts on Jan. 26, which would surpass the current winter peakload record of 80.525 GW set Feb. 20, 2025.

ERCOT issued Jan. 23 a watch for the extreme cold weather system approaching its region. Temperatures are expected to remain below freezing, with the possibility of frozen precipitation Jan. 24 through noon on Jan. 27.

"ERCOT has notified the Texas Commission on Environmental Quality that this condition requires the use of all available generation during this period, including any additional generation that may be subject to emissions limits or other restrictions subject to enforcement by the TCEQ," ERCOT said in an operations notice Jan. 23. "ERCOT has therefore requested that the TCEQ exercise its enforcement discretion with respect to any generator exceedances of these operating restrictions that may occur during this period."

In reaction, ERCOT North Hub off-peak real-time prices for Jan. 23 spiked to $1,501.04/megawatt-hour on the Intercontinental Exchange, a premium to the on-peak real-time price of $750.92/MWh. On-peak weekend traded at $425/MWh, while on-peak day-ahead for Jan. 26 delivery traded at $790/MWh, up $709.99 day on day. The on-peak balance-of-the-week package traded at $170/MWh. In comparison, ERCOT North Hub on-peak day-ahead location marginal prices have averaged $40.01/MWh so far in January, according to ERCOT data.

The current weather forecast for CenterPoint's Houston electric service territory indicates the potential for ice accumulation this weekend, according to a Jan. 23 statement from the utility. CenterPoint activated its Emergency Operations Center on Jan. 22 and secured more than 600 additional frontline workers for an expanded workforce of 3,300 workers and personnel to address the approaching winter storm.

The company's three staging sites will host hundreds of workers and help pre-position crews, vehicles, equipment and materiel needed for restoration across its service territory, according to Entergy. These staging sites are strategically placed to position resources in locations where the winter weather system's impact is forecast to be the most severe.

PJM outlook

The PJM Interconnection and the Southwest Power Pool also forecast peakload to surpass all-time winter records.

PJM forecast peakload to reach 147.036 GW on Jan. 27. The current winter peakload record is 143.336 GW set on Jan. 22, 2025. PJM West Hub on-peak weekend traded at $338/MWh on ICE, while the on-peak day-ahead package traded at $417.45/MWh for Jan. 26 delivery. In comparison, PJM West Hub on-peak day-ahead LMP has averaged $49.59/MWh so far in January, according to PJM data.

"Appalachian Power is fully prepared for the incoming snow and ice storm," George Porter, Appalachian Power director of communications, said. "We have crews and mutual aid partners staged, critical equipment inspected and are coordinating closely with PJM to preserve system stability. ... Our teams will restore service as safely and as quickly as conditions allow."

SPP forecast peakload to reach 48.167 GW Jan. 26, which is 25 MW above the current winter peakload record of 48.142 GW set Feb. 20, 2025.

SPP outlook

SPP North Hub on-peak day-ahead for Jan. 26 delivery was bid at $250/MWh and offered at $750/MWh on ICE. South Hub on-peak weekend was bid at $275/MWh and offered at $375/MWh, while on-peak day-ahead traded at $500/MWh on ICE. For comparison, North Hub on-peak day-ahead LMP has averaged $37.34/MWh so far in January, while South Hub on-peak day-ahead LMP has averaged $25.69/MWh, according to SPP data.

SPP issued a conservative operations advisory from Jan. 24 to noon Jan. 26. Conservative Operations Advisories, which do not require the public to conserve energy or take any action, are issued to raise awareness among its member utilities, load-responsible entities, and transmission and generation owners and operators of the need to mitigate potential reliability risks by operating more conservatively than under normal conditions.

"The advisory is being declared due to moderate to high risk associated with capacity sufficiency and increased operational risk, particularly in the southern regions of the Balancing Authority," SPP said in the advisory. "This means that power demand is expected to be high because of extremely cold temperatures, which may place added stress on the system, especially in southern areas of the Balancing Authority."

NYISO, MISO preparations

The New York Independent System Operator said in a Jan. 23 statement that it has adequate generating capacity in place to meet electricity demand under forecast extreme winter conditions for Jan. 24-29. NYISO forecast peakload to rise to 24.45 GW by Jan. 29, with 29.893 GW available to serve load across the state. The all-time winter peakload record is 25.738 GW reached on Jan. 7, 2014.

"Our assessment finds there are adequate resources to serve demand on the grid under forecasted conditions, but we've also seen generators in recent winters challenged with accessing adequate fuel capacity during very cold conditions," NYISO Vice President of Operations Aaron Markham said in the statement. "We continue to work closely with power producers, utility companies and neighboring grid operators to assess the status of generating and transmission capacity in advance of the cold snap."

NYISO Zone G on-peak weekend traded at $305/MWh on ICE, while on-peak day-ahead for Jan. 26 traded at $380/MWh and balance-of-the-week traded at $400/MWh. In comparison, Zone G on-peak day-ahead LMP has averaged $96.78/MWh month to date, according to NYISO data.

MISO forecast peakload to climb to 106.545 GW Jan. 26, with wind forecast to climb to 17.218 GW by Jan. 27 from 4.837 GW Jan. 23 as the storm blows through the region. MISO's all-time winter peakload record is 109.307 GW reached on Jan. 6, 2014

Indiana Hub on-peak weekend was bid at $260/MWh and offered at $344/MWh on ICE, while on-peak day-ahead for Jan. 26 traded at $375/MWh. In comparison, Indiana Hub on-peak day-ahead LMP has averaged $43.73/MWh so far in January, according to MISO.