EIA: Gas Price Hikes Pushed Up Wholesale Power Prices Across U.S. in 2013
Increases in spot natural gas prices generally prompted wholesale electricity price hikes across the nation from in 2013, but power prices were the highest in the Pacific Northwest and New England, the Energy Information Administration (EIA) said on Tuesday.
Average wholesale electricity prices at the Mid-Columbia trading hub were $37.53/MWh—soaring 64% in 2013 compared to 2012. The EIA noted that power in the Pacific Northwest region is typically the least expensive because it relies primarily on hydropower, which has a “very low operating cost.” The region, however, saw a drier spring in 2013 than in 2012 and 2011. Meanwhile, colder-than-normal temperatures in December led to short-term spikes in both the natural gas and power markets in the region. About 5% of the increase in wholesale power prices between 2012 and 2013 is attributable to the December price spike.
In New England, which is experiencing an increasingly strained natural gas pipeline infrastructure, cold weather sent day-ahead power prices soaring to more than $200/MWh in January and February 2013. The region saw a second price spike in November and December, both in the natural gas and power markets.
Other U.S. regions saw increases in wholesale prices last year as natural gas prices generally increased from below–$3/million British thermal unit (MMBtu) levels last logged in April 2012. Over 2013, the average wholesale price for natural gas at Henry Hub rose 35% to $3.73/MMBtu. Increased winter demand pushed inventories down and prices up to above $4/MMBtu in March and April. The EIA noted, however, that “decreased consumption for electric generation over the summer and positive (but flattening) production growth kept 2013 prices at their lowest level since 2002 with the exception of 2012.”
The rising gas prices pushed up power prices unevenly in some regions. “For example, the power price at PJM West in the Mid-Atlantic region increased 14% while the natural gas price in that region (Transco Leidy Hub) increased 11%,” the EIA said.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)