04/16 13:54
Northeast Power Prices Surge as Warm Weather Strains Supplies
By Bradley Keoun

Vineland, New Jersey, April 16 (Bloomberg) -- Power prices in the U.S. Northeast surged for a second day as unusually warm weather increased demand for electricity to run air conditioners.

Temperatures in New York and Washington were expected to reach 90 degrees Fahrenheit (32 Celsius) tomorrow, after rising into the high 80s today, the National Weather Service said. The unseasonable heat wave came after some utilities had shut power plants for annual spring maintenance, limiting supply.

``We're not going to be anywhere near our peak summertime demand, but there's a lot of equipment in the region that's out for maintenance,'' said Paul Yatcko, director of Vineland, New Jersey's municipal electric utility. Two of Vineland's five power plants are down for repairs and won't be back until May, he said.

Wholesale power for delivery tomorrow on PJM Interconnection LLC's electricity grid rose $13.37, or 17 percent, to $91.35 a megawatt-hour, the highest price since last summer, according to Bloomberg data. Prices on the grid, which covers Delaware, New Jersey, Pennsylvania, Maryland and Washington, D.C., have more than tripled in the past week.

Prices for electricity delivered tomorrow in New York City rose $11.42, or 21 percent, to $65 a megawatt-hour, also the highest price since last summer. A megawatt is enough power for 1,000 typical homes.

Reading Municipal Light Department, a municipal utility that serves 27,000 customers in four Massachusetts towns, expects demand of about 118 megawatts tomorrow, up from 95 megawatts today, said Jane Parenteau, a senior energy analyst at the utility. That would be higher than the April 2001 peak of 95 megawatts, though well below last August's peak of 155 megawatts.

Summer-Like Prices

``The market tends to react whenever there's a heat wave,'' Parenteau said. ``We're seeing a little bit above-average springtime temperatures, but nowhere near our summer demand.''

Electricity prices for delivery tomorrow on ISO New England Inc.'s grid rose $1.94, or 3.5 percent, to $57 a megawatt-hour. The grid covers Massachusetts, Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont.

Temperatures above 90 tomorrow won't trigger as much electricity demand as it would during the summer because many homeowners aren't prepared to crank up their air conditioners, said Hubert M. Bianco, superintendent of the municipal utility in Freeport, New York, which has 15,000 customers.

``We have a large residential customer base, and a lot of people haven't had a chance to put their window a/c units in,'' Bianco said. ``The biggest concern is that there are a lot of generating units that are out for maintenance across the state,'' forcing generators to run some of their less-efficient, higher- cost power plants, he said.

Importing Power

Normally at this time of year, Freeport would meet demand from customers by buying and transmitting 37 megawatts from the New York Power Authority's 2,160-megawatt hydropower plant near Niagara Falls. To meet tomorrow's demand, which is projected to rise above 40 megawatts, the utility will crank up some of its six diesel generators and one oil-fired plant, Bianco said.

``We have additional maintenance that we want to do in the next couple weeks, but we'll wait until the weather breaks,'' he said.

Another reason demand won't be as high this week as it is during the summer: Summer heat waves typically last longer, said Vineland's Yatcko.

``In the summer, the ground heats up, the buildings heat up, the streets heat up, and they tend to store heat overnight, so the thermal loading on your equipment is higher and it's sustained,'' he said. ``At this time of year, it might go up to the 80s during the day, and then temperatures fall back down at night, so you don't have the sustained air-conditioning demand.''

Vineland's 23-megawatt coal-fired plant and a 25-megawatt plant that burns oil are down for maintenance, he said. Another 18- megawatt oil-fired plant ``will be running flat out this afternoon'' to meet the demands of the utility's 18,000 customers.

Two other oil-fired plants, with a combined 18 megawatts of generating capacity, are older, less-efficient plants, and high oil prices make them unprofitable to run until prices rise above $100 a megawatt-hour, he said.