Western US power prices plunge after record-highs; heat wave to leave region

Western US wholesale power prices plunged as much as $62 day over day on Aug. 25 as a regional heat wave is forecast to move out of the region midweek.

Spot prices in the Pacific Northwest hit a six-month high on Aug. 25 and spot prices in Southern California hit an 11-month high on Aug. 22 as above-normal temperatures drove up cooling demand.

"Warm core ridging across the Northwest will aid and abet a heat wave across Northwest, continuing on [Aug. 25] and [Aug. 26], before losing its grip on the region on Wednesday," the National Weather Service's Weather Prediction Center said Aug. 25 in its daily discussion.

Before the heat wave is over, numerous daily high temperature records are likely to be broken, the weather service added.

Despite the heat driving up demand, the grid operator has not needed to issue a call for electricity conservation. The California Independent System forecast summer peakload to reach 46.094 GW in September with "sufficient resources to meet a wide range of system conditions in load, solar, wind generation, and generation resource outages," according to CAISO's 2025 Summer Loads and Resources Assessment. CAISO's all-time peakload record is 52.061 GW reached on Sept. 6, 2022.

Market impacts

CAISO forecast peakload is to drop 5.5% day over day to 38.47 GW for Aug. 26, after reaching an 11-month high of 43.921 on Aug. 21, driving up power prices.

NP15 on-peak day-ahead locational marginal prices reached a seven-month high of $58.33/MWh for Aug. 22 delivery, while SP15 on-peak day-ahead LMP reached an 11-month high of $63.34/MWh, according to CAISO data. For comparison, NP15 prices have averaged nearly $38.25/MWh so far in August, 6% higher than the July average, while SP15 prices have averaged about $35.50/MWh this month, 11.4% higher month over month.

Further driving up CAISO power prices, solar-powered generation output has dropped nearly 20 MWh in the last month. Solar output has averaged 204.492 GWh/day so far in August, compared to an average of 222.717 GWh/d in July, according to CAISO data. Filling in the gap, thermal-fired generation output jumped 44% to average 221.524 GWh/d so far this month from 153.524 GWh/day in July.

As thermal usage increased, so did natural gas prices. Spot gas prices at SoCalGas city-gate have averaged $3.338/MMBtu so far in August, a jump of 70% from the July average. Imported generation also increased 27% from last month to average 60.944 GWh/d month to date.

However, the drop in expected demand is pulling down prices in Aug. 25 trading on the Intercontinental Exchange.

In the Pacific Northwest, Mid-C on-peak day-ahead traded around $79.50/MWh for Aug. 26 delivery on ICE, down 29% day over day, while COB on-peak day-ahead traded near $77.50/MWh, a drop of 44%.

In the Desert Southwest, Palo Verde on-peak day-ahead traded at about $57.50/MWh for Aug. 26 delivery on ICE, down 21% day over day.

The price decrease was less severe in California, where NP15 on-peak day-ahead traded at about $53.25/MWh, down 1% on the day, as SP15 on-peak day-ahead traded near $54/MWh, a decrease of 7.4%.

For the on-peak balance-of-the-week package, SP15traded in the upper $30s/MWh on ICE Aug. 25.