NEW YORK (Reuters) - Wholesale power prices jumped in the U.S. Northeast, with spot prices for Friday more than tripling in some areas as an incoming arctic blast that threatened record low temperatures kicked up electricity demand.
Prices in ISO New England surged by 140% to about $237 per megawatt hour (MWh), while prices in PJM Interconnection, the country's largest grid operator, soared by nearly 260% to roughly $145 per MWh.
Looking ahead to Monday, however, when the weather is expected to turn milder, power prices in PJM were on track to drop around 78% to just $32 per MWh, according to data from the Intercontinental Exchange (NYSE:ICE).
The prices for Friday neared those reached during a late-December polar vortex, which left the grid operators racing to match demand with electric generation to narrowly avoid rotating blackouts.
Some generators that failed to supply power during last year's winter storm now face penalties totaling about $3 billion under agreements with PJM and nearly $40 million in penalties in connection with ISO New England.
Parts of New England could see all-time low temperatures during the freezing blast expected to last through Sunday, according to the National Weather Service (NWS).
ISO New England said it currently has enough available capacity to meet forecasted demand peaks for the day.
With spot gas prices in New England rising by 437% to $26 per million British thermal units, also their highest since late December, some of the region's power generators have begun to burn oil instead of gas. The share of fuel oil and gas used in New England's power generation mix reached roughly 17% and 20%, respectively, on Friday.
Fuel oil typically makes up around 1% and gas 50% of the power generation fuel mix, which also includes nuclear, coal and renewables like wind and solar. The region's limited access to gas supplies has led it to burn more oil in times of frigid weather.