HOUSTON — Predictions of a possible severe weather storm in the Northeast at the end of January is pushing forward natural gas prices up, according to Platts.
“The market is already priming itself, should a severe weather event hit,” said Samantha Santa Maria, managing editor of news for Platts, in a webcast discussion Monday.
Despite a building flurry of new pipelines in the Northeast, a series of winter storms have increased demand, exhausting storage reserves and pushing up natural gas prices, Santa Maria said.
The storms also have tested the limits of electricity grids around the country. Prices soared in several electricity markets throughout the northeast, reaching $2,000 per kilowatt hour at the peak in the PJM market, according to Mike Wilczek, senior managing editor of markets for Platts. The PJM includes parts of 13 states in the Northeast and Midwest, stretching from New Jersey to Illinois.
“The trouble of gas supply and other cold weather issues can make winter peaks just as difficult for the grid operators as the summer,” Wilczek said.
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Increased demand, plant performance issues and natural gas supply issues can all impact winter electricity prices, he said.
In Texas, the spot market power price shot up above $5,000 per kilowatt-hour amid sub-freezing temperatures on Jan. 6 morning, exceeding the $4,500 cap because of additional transmission costs, according to a spokeswoman for the state’s grid manager ERCOT. The spot market for electricity typically trades at roughly $30 to $100 kilowatts per hour under normal conditions.
The PJM market came close to rolling blackouts on Jan. 7, and resorted to reducing voltage and implementing demand reductions with certain customers in order to keep the system stable.
The New England grid had high electricity prices during the storm due to the spike in natural gas prices, but did not face the same potential blackout threats, Wilczek said.
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