| NEW YORK, March 1
NEW YORK, March 1 What a difference a year
Twelve months ago, tumultuous weather in the U.S. Northeast
caused record natural gas price spikes and forced some power
plants to shut for lack of fuel as power producers scrambled to
outbid each other for scarce supplies.
This February, the region has shivered through the coldest
weather in 81 years, yet gas prices are a fifth lower than a
year ago after power generators, learning lessons from last
winter, stocked up on extra oil and gas from domestic and
overseas sources before the weather turned cold.
New England's power grid operator, ISO New England, provided
incentives to encourage generators to lock in oil and gas
supplies early, offering an end-of-season cash payout to cover
any excess costs from unused fuel supplies, among other things.
Liquefied natural gas (LNG) was also included in the program for
the first time this year.
"Both the region's power grid and its resources have been
operating well this winter, even through the arctic cold, and
the winter reliability program has been a big part of that
because it helped ensure that resources had fuel to operate when
we needed them," said Lacey Girard, ISO New England spokeswoman.
ISO New England said 79 oil and dual-fuel units able to burn
both gas and oil bought about 4.5 million barrels of oil. In
addition, six gas units bought fuel from LNG terminals that
bring gas in from overseas as part of the current winter
To be sure, the amount of gas in storage nationwide this
winter is 42 percent higher than last winter due in part to near
record production mostly from shale gas fields, which has erased
the kind of panic premium baked into last winter's gas prices.
Still, experts say there has been a marked difference in
purchasing behavior this year that has dampened price
"Many generators signed up for the winter reliability
program, even though compensation wasn't as high as last year,
and other generators that didn't sign up, nonetheless kept their
fuel stocks high to mitigate their own risks," said David Gaier,
spokesman at power generator NRG Energy Inc.
That preparation paid off in February in particular.
The average temperature of 18.7 degrees Fahrenheit (minus
7.4 Celsius) in Boston this February was the coldest since 1934
and the second coldest since records began in 1872, according to
private forecaster MDA Information Systems LLC. New York City
had its coldest February since 1885, it said.
"It's the coldest February in a lifetime for much of the
U.S. Northeast," said MDA Operational Meteorologist Steven
Thomson Reuters Analytics said demand for gas in the U.S.
Northeast averaged 23.3 billion cubic feet per day so far in
February compared with 19.8 bcfd last February and a 30-year
average of 18.2 bcfd.
Despite the brutal cold, however, natural gas prices have
Next-day prices in February at the Algonquin hub
E-ALGCIT-IDX in New England averaged $17.73 per million
British thermal units on the IntercontinentalExchange compared
with a record high of $22.50 last February, according to data
going back to 2003.
Imports from U.S. LNG terminals quadrupled in February,
averaging 0.8 bcfd versus 0.2 bcfd in the same month a year ago,
with much of that gas coming from Northeast terminals, according
to Thomson Reuters Analytics.
Those oil and LNG purchases helped moderate the rise in gas
prices this winter even though no major new gas pipelines
entered service over the past year.
(Reporting by Scott DiSavino and Edward McAllister; Editing by