The Commercial-News, Danville, IL

Community News Network

March 5, 2014

Frigid U.S. weather means highest power prices since '08

NEW YORK — Freezing temperatures gripping the eastern U.S. will result in the highest electricity prices in six years for consumers in Boston, Dallas and San Francisco.

Supplies of natural gas and coal will decline to six-year lows by the end of this month, government data show. The fuels are used to generate 67 percent of the country's electricity. Wholesale power for use from April through June in New England traded at an average of $62.15 a megawatt-hour Tuesday, 26 percent more than a year earlier and the highest for the period since 2008, according to IntercontinentalExchange and broker data compiled by Bloomberg.

The coldest start to a year since 2011 means consumers won't see the normal seasonal drop in power prices. Natural gas is up 32 percent compared with a year ago, adding to costs for home heating and power generation. Maintenance planned for a third of U.S. nuclear reactors in the next three months, the most for the season in at least 14 years, will further boost reliance on fossil fuels.

"The power markets that got hammered in the first quarter, given the low supply environment, aren't going to see much relief in the second quarter," said Eric Bickel, a natural gas analyst at Schneider Electric in Louisville, Ky.

Power at Northern California's NP15 hub and at hubs serving Dallas and Central Texas were also at the highest since 2008, while April to June prices for PJM Interconnection LLC, the 13- state grid stretching from Washington to Chicago, are the highest since 2011.

Wholesale electricity futures covering consumption this spring are already trading at six-year highs in Boston and San Francisco.

"Consumers should anticipate higher energy bills," said Teri Viswanath, the director of commodities strategy at BNP Paribas SA in New York.

California wholesale prices also jumped as a record drought reduced production from hydroelectric plants, which account for 15 percent of the state's power supply.

Nationwide, consumers may pay an average of 12.28 cents per kilowatt hour from March to May, 2.5 percent more than a year earlier, according to U.S. Energy Information Administration data. Prices will be highest in New England.

Surging demand during the cold weather sent gas inventories in the lower 48 states to 1.348 trillion cubic feet on Feb. 21, the least for the time of year since 2004, EIA data show. Supplies may end March at 1.33 trillion, the lowest for the first quarter since 2008, the EIA said in a Feb. 11 report.

Goldman Sachs expects supplies to drop to 1 trillion cubic feet by the end of March, while Citigroup is projecting 898 billion cubic feet. Either would be the lowest level for the end of the first quarter since 2003, according to government data.

Gas futures rose as high as $4.722 per million British thermal units in Wednesday's electronic trading after settling Tuesday at $4.667 on the New York Mercantile Exchange. Prices surged to a five-year intraday high of $6.493 on Feb. 24.

The price of power is mostly based on gas, said Kate Trischitta, the director of trading at Consolidated Edison Inc.'s wholesale energy trading unit in Valhalla, N.Y.

Stockpiles of coal for electricity generators will fall to 147 million short tons (133 million metric tons) by the end of this month, the least for the time of the year since 2008, according to EIA estimates.

A seasonal slackening of electricity consumption in the U.S. spring will give generators some room to "wiggle" between using gas and coal, Bickel said.

Central Appalachian coal, the benchmark U.S. grade, jumped 14 percent since Nov. 1 to $62.63 a ton Tuesday on the Nymex after reaching a two-year high of $63.75 on Feb. 26.

Appalachian coal stands to benefit the most from higher natural gas prices, because it's in the region where the two fuels compete the most, Michael Hsueh, an analyst at Deutsche Bank in London, wrote in a Feb. 28 report.

Power producers will choose to rely on coal-fired units before turning to gas over the next 12 months "unless they run into problems replenishing their already-depleted coal stockpiles," Angie Storozynski, a New York-based utility analyst with Macquarie Capital USA Inc., wrote in a Feb. 25 report.

Storozynski expects gas to average $4.60 per million Btu through the first quarter of 2015, which would be the highest average for April through June since 2008.

As utilities endure with below-normal gas and coal inventories, 32 nuclear reactors are scheduled to go offline through the end of May for maintenance, according to government data compiled by Bloomberg.

Nuclear plants are taken out of service to replace spent fuel rods every 18 to 24 months. Companies typically stagger the shutdowns to avoid idling too much capacity simultaneously.

The effect of lower output on power prices may be exacerbated by the permanent shutdown of four plants in 2013, removing a combined 3,600 megawatts from service. That's enough to power more than 3 million homes.

Maintenance will be most widespread in the east, where 22 plants are scheduled to refuel. Entergy Corp.'s 1,299-megawatt Indian Point 2 reactor near New York City, the largest in the Northeast, was taken offline Feb. 24. The plant can generate enough power to serve about 1 million homes. Tennessee Valley Authority's 1,270-megawatt Watts Bar 1 site, the biggest in the Southeast, is expected to close for refueling this month. The plant is about 55 miles southwest of Knoxville, Tenn.

"We have a heavy nuclear refueling season ahead of us and a lot of that generation is going to be replaced directly with natural gas or coal," said Viswanath of BNP Paribas. "That complicates things because the market is short of those fuels."

1
Text Only
Community News Network
  • An alarming threat to airlines that no one's talking about

    It's been an abysmal year for the flying public. Planes have crashed in bad weather, disappeared over the Indian Ocean and tragically crossed paths with anti-aircraft missiles over Ukraine.

    July 30, 2014

  • Sharknado.jpg Sharknado 2 set to attack viewers tonight

    In the face of another "Sharknado" TV movie (the even-more-inane "Sharknado 2: The Second One," premiering Wednesday night on Syfy), there isn't much for a critic to say except to echo what the characters themselves so frequently scream when confronted by a great white shark spinning toward them in a funnel cloud:
    "LOOK OUT!!"

    July 30, 2014 1 Photo

  • 20140729-AMX-GIVHAN292.jpg Spanx stretches into new territory with jeans, but promised magic is elusive

    The Spanx empire of stomach-flattening, thigh-slimming, jiggle-reducing foundation garments has expanded to include what the brand promises is the mother of all body-shaping miracles: Spanx jeans.

    July 29, 2014 1 Photo

  • Medical marijuana opponents' most powerful argument is at odds with a mountain of research

    Opponents of marijuana legalization are rapidly losing the battle for hearts and minds. Simply put, the public understands that however you measure the consequences of marijuana use, the drug is significantly less harmful to users and society than tobacco or alcohol.

    July 29, 2014

  • linda-ronstadt.jpg Obama had crush on First Lady of Rock

    Linda Ronstadt remained composed as she walked up to claim her National Medal of Arts at a White House ceremony Monday afternoon.

    July 29, 2014 1 Photo

  • Can black women have it all?

    In a powerful new essay for the National Journal, my friend Michel Martin makes a compelling case for why we need to continue the having-it-all conversation.

    July 29, 2014

  • Dangerous Darkies Logo.png Redskins not the only nickname to cause a stir

    Daniel Snyder has come under fire for refusing to change the mascot of his NFL team, the Washington Redskins. The Redskins, however, are far from being the only controversial mascot in sports history.  Here is a sampling of athletic teams from all areas of the sports world that were outside the norm.

    July 28, 2014 3 Photos

  • 'Rebel' mascot rising from the dead

    Students and alumni from a Richmond, Va.-area high school are seeking to revive the school's historic mascot, a Confederate soldier known as the "Rebel Man," spurring debate about the appropriateness of public school connections to the Civil War and its icons.

    July 28, 2014

  • Fast food comes to standstill in China

    The shortage of meat is the result of China's latest food scandal, in which a Shanghai supplier allegedly tackled the problem of expired meat by putting it in new packaging and shipping it to fast-food restaurants around the country

    July 28, 2014

  • wd saturday tobias .jpg Stranger’s generosity stuns Ohio veteran

    Vietnam War veteran David A. Tobias was overwhelmed recently when a fellow customer at an OfficeMax store near Ashtabula, Ohio paid for a computer he was purchasing.

    July 28, 2014 1 Photo

E-edition
AP Video
Obama Chides House GOP for Pursuing Lawsuit New Bill Aims to Curb Sexual Assault on Campus Russia Counts Cost of New US, EU Sanctions 3Doodler Bring 3-D Printing to Your Hand Six PA Cops Indicted for Robbing Drug Dealers Britain Testing Driverless Cars on Roadways Raw: Thousands Flocking to German Crop Circle At Least 20 Chikungunya Cases in New Jersey Raw: Obama Eats Ribs in Kansas City In Virginia, the Rise of a New Space Coast Raw: Otters Enjoy Water Slides at Japan Zoo NCAA Settles Head-injury Suit, Will Change Rules Raw: Japanese Soldiers Storm Beach in Exercises Raw: Weapons Fire Hits UN School in Gaza Raw: Rocket Launches Into Space With Cargo Ship Broken Water Main Floods UCLA Two Women Narrowly Avoid Being Hit by Train Crayola Announces Family Attraction in Orlando
NDN Video
Heartwarming 'Batkid Begins' Documentary is Tear-Jerker Sadie Doesn't Want Her Brother to Grow Up Broken Water Main Floods UCLA "Maxim" Hotness! See Jessica Alba's Sizzling Spread Two women barely avoid being hit by train Orlando Bloom and Justin Bieber Reportedly Came To Blows In Ibiza Meet the Man Behind Dumb Starbucks Chris Pratt Adorably Surprises Kids at a 'Guardians of the Galaxy' Screening NOW TRENDING: Peyton Manning dancing at practice "The Bachelorette" Makes Her Decision Thieves pick the wrong gas station to rob Golden Sisters on '50 Shades' trailer: 'Look At That Chest!' Staten Island Man's Emotional Dunk Over NYPD Car - @TheBuzzeronFOX GMA: Dog passes out from excitment to see owner Baseball Hall of Famers Inducted 'Hunger Games: Mockingjay Part 1' Sneak Peek Florida Keys Webcam Captures Turtles Hatching Morgan Freeman Sucks Down Helium on 'Tonight Show' Robin Wright Can Dance! (WATCH) She's Back! See Paris Hilton's New Carl's Jr. Ad
Must Read