US power prices surged higher by nearly 50% on average last week.
Every observed US power market is experiencing a price hike related to increased natural gas spot prices and colder weather. Additionally, some price records were broken.
There was little escape for the market as the US experienced rising power prices across the board last week.
The end is not in sight, and we expect this trend to continue throughout the winter, particularly in the northeast and the west.
The Texas power market had relatively low power prices, helped in large part by wind power generation.
California broke weekly and daily power price records for the US last week, breaching $300 per megawatt-hour (MWh) for a weekly price and $400 per MWh in a single day.
The Californian power market (CAISO) spot prices are still much higher than other observed markets, averaging $333.03 per MWh last week – the highest average power price California has ever seen.
The power price on Wednesday, December 14, was $421.56 per MWh, the highest recorded average power price for a single day.
California and the rest of the Western Interconnection are experiencing these record-high prices because natural gas rates in the western US have risen dramatically.
Last week, the Californian power market gas prices reached over $30 per million British thermal units (Btu).
To put that into context, the reported gas price for CAISO has never reached above $10 per million Btu.
For most of the US, the Henry Hub natural gas spot price is a valid benchmark.
The Henry Hub increased from under $5 per million Btu to over $7 per million Btu in just one week, pushing power prices through the roof.
New England Independent System Operator (ISO-NE), individually, had the highest weekly percentage increase of 113% to $121.87 per MWh.
This is the highest weekly power price in the region since the beginning of August when the Henry Hub spot price was over $8 per million Btu.
Texas was the most resistant to the power price surge, increasing weekly prices by only around 10% to $44.14 per MWh.
Texas has by far the lowest prices in observed US markets.
Texas’ low power prices are a combined result of a relatively diverse power mix, high wind power generation, and the lowest gas prices in the US.
Wind power generation in Texas last week was impressive, often overtaking gas generation as the state’s lead power producer on multiple days.
Additionally, the days wind power overtook natural gas in terms of generation contribution were when Texas power prices went under $40 per MWh.
Power prices will continue to surge in much of the northeast and western parts of the US as natural gas prices continue to rise and winter drags on.
