East Coast heat wave promises to jolt U.S. power and gas prices
NEW YO R K The most intense heat of the year across the U.S. East Coast may fire up electricity and natural gas prices as households and businesses crank up their air conditioners over the next several days.
Simmering temperatures expected to sweep across the U.S. Midwest, mid- Atlantic and Northeast over the next five days may boost power demand to a nine-month high, according to grid-manager PJM Interconnection LLC. Washington’s high will soar to 97 degrees Fahrenheit (36 Celsius) June 14, 13 above normal, capping a four-day streak with readings topping 90, according to AccuWeather Inc. New York, Philadelphia, and Detroit will also see readings over 90.
The bout of heat will be intense, and short-lived, with the high in New York falling from 90 degrees June 13 to 71 two days later. While that may cheer households and businesses, power generators need more than a few hot days to make up for prices that have touched record seasonal lows at times this past spring.
“We finally have some weather,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “We are talking about a very brief shot of really hot air, which is probably lending some support to the market.”
Wholesale power in PJM’s benchmark Western hub, which includes Washington, jumped to US$53 for Monday and US$56.40 for Tuesday from the mid-US$20s this week, Eric Newell, director of trading and energy management at Consolidated Edison Inc., said by email.
Spot gas for delivery to New York City, which closed Thursday at US$2.09 per million British thermal units, rose about 60 cents Friday on the Intercontinental Exchange and may approach US$3 next week, Newell said. Natural gas futures are down 18 per cent this year on the New York Mercantile Exchange, the worst loss for the period since 2012.
In New York, the shutdown of nuclear generation may add volatility to power prices. Entergy Corp. will take its Indian Point Unit 3 out of service on Sunday night for planned work. The unit’s summer capacity is 1,031 megawatts.
The culprit behind the heat is a large area of high pressure building across the central U.S. that will send temperatures into the 90s across the Great Plains and as high as the low 100s in west Texas, said Brendon Rubin- Oster, a forecaster at the U.S. Weather Prediction Center in College Park, Maryland. All that heat will creep eastward over the next few days.