EIA: Wholesale Power Prices Increased Across US in 2014
Wholesale on-peak electricity prices were up across the nation between 2013 and 2014, according to the US Energy Information Administration. The increases were driven largely by increases in spot natural gas prices and high energy demand caused by the extreme cold-weather system that covered much of the United States during the winter of 2013–2014.
Electricity prices were highest in the Northeast, driven by record-high natural gas prices early in the year. Spot natural gas prices at the Henry Hub averaged $4.38 per million British thermal units (MMBtu) in 2014, an increase of 17 percent from 2013, and prices at other major trading points were up between 16 percent and 40 percent in 2014. Electricity increased the least—only 3 percent—in the Pacific Northwest, where there is low-cost hydroelectric generation.
As a result of the polar vortex that chilled the nation last winter, natural gas pipelines were often filled to capacity, leading to record-high wholesale natural gas prices at several locations. Spot natural gas prices reached $120/MMBtu in New York City, $78/MMBtu in Boston and $34/MMBtu in Chicago. Spot wholesale electricity prices spiked in turn. Peak hourly spot electricity prices exceeded $518/MWh in New York City, $467/MWh in New England and $190/MWh in Northern Illinois.
After trending down over the past decade, petroleum use for electric generation spiked last winter. In January 2014, more than 10 million barrels of petroleum products were used to generate electricity, the highest since February 2007 and nearly three times more than the previous January.
Coal deliveries were also slower, resulting in shrinking power plant coal stockpiles. Problems with rail deliveries of coal continued into 2014. In response, power plant operators purchased electricity from the wholesale market, reduced output at select facilities and in a few cases moved coal by truck instead of rail to manage stockpiles.
US coal stockpile levels improved toward the end of the year, but rebuilding stockpiles is expected to continue into 2015 and possibly 2016.
The summer of 2014 was relatively quiet in 2014. Daily peak loads were significantly lower than all-time peak loads in all regions except Texas, where a peak load of 66,725 MW on August 25 approached the 68,305 MW all-time peak set in August 2011.
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