U.S. West power prices soar to four-year highs as heat wave bakes region

(Reuters) - Electric prices in some U.S. Western markets rose to their highest in more than four years as power generators compete for dwindling natural gas supplies to keep air conditioners humming as a heat wave bakes much of the region.

FILE PHOTO: A sign warns of extreme heat as tourists enter Death Valley National Park in California June 29, 2013. The high temperature reached 128 degrees fahrenheit. REUTERS/Steve Marcus

Utilities in California and Arizona were competing for gas supplies with Texas, where much of the region’s gas is piped in from.

Power generators in Texas have been burning as much gas as they can to meet demand, which peaked at an all-time high for a second day in a row on Thursday and is expected to keep hitting new highs over the next few days as a brutal heat wave blankets the state.

Power prices at the Palo Verde hub in Arizona soared to $155.50 per megawatt hour on Thursday, the highest since February 2014, from $55.00 on Wednesday. That compares with averages of $28.13 since the start of the year and $32.94 for all of 2017.

Temperatures in Phoenix, the nation’s fifth-biggest city, are forecast to top 110 degrees Fahrenheit (43 Celsius) for most of next week, according to AccuWeather. That is hot even for the city, where the mercury has hit the triple digits every day since the end of May and the normal high at this time of year is 106 degrees F.

The biggest power company in Arizona is a unit of Pinnacle West Capital Corp.

In Southern California, power and gas prices jumped on Thursday to their highest since February with temperatures in some desert cities expected to top 100 degrees F next week.

Southern California Gas (SoCalGas), which supplies gas to over 25 million consumers in Southern California, warned customers on Thursday that they may be required to reduce their gas use next week, if supplies run short.

Although high temperatures in Los Angeles were expected to remain near normal levels of around 84 degrees F through Sunday, the mercury in the City of Angels is expected to jump into the mid-90s during much of next week, according to AccuWeather.

Gas supplies are expected to remain tight in Southern California this summer and winter due to reduced availability from SoCalGas’ Aliso Canyon storage facility in Los Angeles, following a massive leak between October 2015-February 2016, and ongoing shutdowns of several pipelines.

SoCalGas is a unit of California energy company Sempra Energy.

Reporting by Scott DiSavino; Editing by Steve Orlofsky