Cold snap drives up Northeast power and gas prices
The frigid temperatures gripping the US Northeast this winter have triggered a surge in power and natural gas prices across ISO New England and New York Independent System Operator (NYISO) territories. This trend is expected to persist into early next week, with temperatures forecast to remain low.
ISO-NE data reveals a dramatic spike in power prices. On-peak day-ahead prices at the Internal Hub averaged $63.77/MWh in November, but soared to $161.97/MWh for the week ending December 5. The peak was reached on December 5, when Boston's temperature plummeted to a frigid 27 degrees Fahrenheit, according to the National Weather Service.
Natural gas prices mirrored this trend. In November, natural gas accounted for 55.3% of the region's power generation. Gas prices at the Algonquin city-gates averaged $4.69/MMBtu in November, but skyrocketed to $17.58/MMBtu for the week ending December 5. This represents an astonishing 182.17% increase since November 28, with prices spiking to $24.51/MMBtu on December 4, the highest since January 21.
The prompt-month forward gas price at the hub averaged $18.55/MMBtu, according to Platts M2MS data. This surge in gas prices coincides with a significant drop in Boston temperatures, from 43 degrees Fahrenheit on November 28 to a forecast of 27 degrees on December 5, according to CustomWeather data.
The NYISO is experiencing similar dynamics. Zone J New York City on-peak day-ahead power prices averaged $62.00/MWh in November, but leapt to $125.36/MWh for the week ending December 5. The temperature on December 4 averaged 29.4 degrees Fahrenheit across the NYISO footprint, according to CustomWeather data, with a forecast of 21.9 degrees on December 5.
Low temperatures have also driven up regional gas prices, though not to the extreme levels seen in New England. Transco Zone 6 gas prices averaged $3.48/MMBtu in November, but rose to $5.73/MMBtu for the week ending December 5. However, prices could increase further during the week ending December 12, as temperatures are expected to average 24.7 degrees Fahrenheit on December 8 before rising back above freezing to 35.4 degrees on December 12, according to CustomWeather data.
Temperatures are forecast to average 34.3 degrees during the week ending December 19.
