U.S. Power and Natural Gas Prices Surge Amid Spring Heatwave, Reports Reuters

U.S. spot power and gas prices surged on Thursday, reaching their highest levels in a year or more across various regions of the country as consumers activated their air conditioning systems to cope with an early spring heatwave.

Prior to this heatwave, gas futures were already nearing a 13-year peak, driven by elevated prices in Europe and Asia, which sustained strong demand for U.S. liquefied natural gas exports. This situation has been further exacerbated by the geopolitical tensions following Russia’s invasion of Ukraine on February 24.

In Pennsylvania, next-day power at the PJM West hub and gas at the Dominion South hub climbed to levels not seen since the February freeze two years ago. AccuWeather projected that high temperatures in Philadelphia would rise from 79°F (26.1°C) on Thursday to 87°F (30.6°C) on Friday and reach 95°F (35°C) on Saturday, with the typical high for this time of year being around 75°F (23.9°C).

In Texas, the Electric Reliability Council of Texas (ERCOT), which oversees the electrical grid for much of the state, predicted that demand would peak at a new monthly record on Thursday. ERCOT indicated that the grid had sufficient resources to meet this demand. However, at the onset of the heatwave, ERCOT had to call for conservation measures on May 13 due to unexpected outages at several power plants, which resulted in real-time prices exceeding $4,000 per megawatt hour (MWh).

AccuWeather noted that Houston experienced daily high temperatures in the 90s°F since May 14, with forecasts showing these conditions lasting through Saturday, while the normal high for the city is 87°F (30.6°C). ERCOT estimated that demand would hit 72,424 megawatts (MW) on Thursday, surpassing the current May record of 70,804 MW set on Tuesday.

In Louisiana, next-day gas at the Henry Hub benchmark reached prices not seen since the record highs during the February 2021 freeze. Meanwhile, in Northern California, next-day gas at the PG&E Citygate rose to levels not observed since February 2019 for the second consecutive day, following a compressor failure on May 16 that necessitated limitations on gas flows from Canada to the Pacific Northwest.