(Reuters) - U.S. spot power and natural gas prices for Wednesday soared in New England to their highest since last winter, with temperatures forecast to turn frigid in the Northeast over the Thanksgiving holiday weekend.
When the weather turns extremely cold in New England, power and gas prices can spike quickly because most consumers use gas to heat their homes and businesses and most of the region’s electricity usually comes from gas-fired power plants.
The region lacks sufficient gas pipeline capacity to supply fuel for both heat and power generation on the coldest days, so many gas-fired plants have to burn more expensive oil when temperatures drop.
Next-day power prices in New England rose to $129 per megawatt hour (MWh) for Wednesday from $102 for Tuesday, their highest since January.
That compares with an average of $47.86/MWh so far this year, $38.29 in calendar 2017 and a five-year average (2013-17) of $52.29.
Gas prices at the New England Algonquin hub rose to $13.70 per million British thermal units (mmBtu) for Wednesday from $11.34 for Tuesday, the highest since January.
That compares with an average of $4.67/mmBtu so far this year, $3.80 in calendar 2017 and a five-year average of $5.33.
High temperatures in Boston, the biggest city in New England, are forecast to drop to the mid 20s Fahrenheit (-5 Celsius) on Thursday and the low 30s on Friday, from the mid 40s on Wednesday, according to AccuWeather. The normal high in Boston is 50 degrees at this time of year.
So far on Wednesday, power generators were still able to get the gas they needed. The fuel mix in the morning was 51 percent gas, 27 percent nuclear, 10 percent hydro, 10 percent renewables and 1 percent coal, according to the regional power grid operator ISO New England.
Pipeline companies have tried to build more pipes across New York to New England from Pennsylvania’s Marcellus shale fields in recent years, but some officials in New York and New England have blocked those efforts, preferring to invest more in energy efficiency and renewable sources of power.
Gas utilities have said more pipelines are needed because consumers are switching from oil to gas to heat homes since it is cheaper and cleaner, and the region is becoming increasingly dependent on gas-fired power plants as more coal and nuclear units shut.
Reporting by Scott DiSavino; Editing by David Gregorio