Dive Brief:
- Spot electricity prices in California, the second-leading power-consuming state, jumped to the highest seasonal level in six years and next-day delivery prices were the highest in two months as record heat drove high air-conditioning use and electricity demand.
- On-peak power at Northern California’s NP15 hub, including San Francisco, for next-day delivery rose on May 12 by $4.68, or 7.8%, to $64.93 a megawatt-hour and at the SP15 hub in Southern California it rose by $2.19, or 3.5%, to $64.95 a megawatt-hour.
- The record heat comes during California’s record four-year drought that has diminished the state’s hydroelectric resource and driven the natural gas inventory to near a ten-year low, with both shortages worsened by the closure of the 2,200 megawatt San Onofre Nuclear Generating Station.
Dive Insight:
Temperatures in California’s interior valleys have exceeded 100 degrees Fahrenheit and the usually mild San Francisco temperature approached 90 degrees.
PG&E is monitoring its electricity supply but has not encountered shortages, Sacramento Municipal Utility District has approached its record peak demand for the first time in eight years, and Southern California Edison is working to make up for the absence of San Onofre and the natural gas shortage.
California spot gas prices have been trading at seasonal highs since February, with the PG&E City Gate price going up 4.01 cents, 0.8%, to $5.0822 per million British thermal units on May 12 and the SoCal City Gate price going up 13.86 cents, 2.9%, to $4.9689 per million British thermal units.
Gas inventories in the U.S. West dropped to 160 billion cubic feet in late March, the lowest in 10 years, and were at 203 billion at the beginning of May, 37% below the five-year average and 41% lower than year-earlier levels.
The early heat “is what everyone feared,” energy consultant Stephen Schork said. “We’ve slashed our nuclear capacity and the state is absolutely vulnerable to demand spikes.”
