Heat wave sends electricity prices soaring in East

Wholesale electricity prices in the day ahead and real time markets in the Northeast soared to triple digits and higher Tuesday because of a heat wave that lingers over the area. Prices were down Wednesday, but demand continued to pressure available supply.

HOUSTON, Aug. 8 -- Wholesale electricity prices in the day ahead and real time markets in the Northeast soared to triple digits and higher Tuesday because of a heat wave that lingers over the area.

New England, New York, and PJM Interconnect are all in the midst of a week-long hot spell sending prices up. In ISO New England standby electricity services were quoted at $1,800/Mw-hr. Prices hit triple digits for energy and ancillary services in PJM Interconnect and in the region served by the New York Independent System Operator.

Prices were so high for 10-minute nonspinning reserves and other ancillary services in New England the ISO said Tuesday's bids were under review and "subject to change." At 4 p.m. 10-minute nonspinning reserves hit $1,800/Mw-hr, while 30-mintue operating reserves were $1,000/Mw-hr.

Prices were mostly in the triple digits for most of the afternoon. Despite the continuing heat wave, energy prices settled back to $34-$70/Mw-hr Wednesday, and ancillary services were down to less than $1/Mw-hr.

Nevertheless, New England ISO said it was seeking an additional 600-900 Mw and would allow short-term emergency transactions to occur Wednesday.

Imports from neighboring New Brunswick were reduced to 352 Mw from Tuesday's 700 Mw and were slightly reduced from other areas, too. Without the forecasted 2,369 Mw of imports, New England would not be able to meet its reserve requirement and could be teetering on the edge of brownouts and rolling blackouts.

Wednesday's peak load is a projected 24,625 Mw in New England. The available capacity without imports in the New England ISO is 24,865 Mw.

Wednesday's prices in the PJM Interconnect varied across several zones. Some points exceeded $100/Mw-hr and rose to $200/Mw-hr by noon. PJM issued a warning that reserves are so tight blackouts are a possibility if the system loses the equivalent of its largest operating generator or transmission facility.

The amount of power being transferred in the eastern and western parts of PJM was approaching the transfer limit and was already above the "warning level."

More in Economics & Markets