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Bloomberg
America’s power grid is starting to show signs of fatigue as the nation grapples with a record-breaking cold snap. Some power plants in New England that have been burning oil are running short on fuel, according to Marcia Blomberg, a spokeswoman for ISO New England Inc., the region’s grid operator. Restrictions governing air emissions are also a factor limiting their use.
“As oil inventories are depleted, replenishment of fuels will be important given the uncertainty aro-und weather and future fuel demands for remaining two months of the winter period,†she said by email.
Oil, a scant contributor to the nation’s power supply in normal weather conditions, has accounted for about 30 percent of New England’s electricity in recent days after temperatures plunged below freezing. A lack of pipeline capacity has constrained natural gas supplies to the region in recent years, causing prices to surge during severe cold snaps. Two power generators said that they’ve been able to overcome challenges posed by the weather.
American Electric Power Co. has “been able to respond to demand as needed,†despite “equipment challenges that typically accompany very cold temperatures,†Melissa McHenry, a company spokeswoman, said in an email. “With few exceptions, our plants are running well,†David Byford, a spokesman for Houston-based Dynegy Inc. said in an interview.
While the deep freeze continues to grip the eastern half of the US, with some cities logging record low temperatures, wholesale electricity prices have failed to skyrocket the way they did last week. In fact, at a hub in Boston, power was trading for half of what it was, even as people blasted heaters to keep warm amid temperatures in the teens.
Power bulls have only the forecasts to blame. Actual electricity demand in New England has tracked below projections for much of the day, data from grid manager ISO New England show. The power system is running under “normal conditions,†with more oil-fired power plants kicking in to keep up with the rise in use, the grid operator said by email.
Buyers locked in power supplies for Boston a day in advance at an average of $194.57 a megawatt-hour for the hour ended at noon New York time, but power there only averaged $148.66 a megawatt-hour in spot trading. Electricity in New York City meanwhile slid to $180 in the hour ended 10 a.m. after surging to almost $400 a day earlier.
Temperatures in Boston on Tuesday were higher than they were a day earlier, and a winter storm striking later this week may end up warming Boston even more, according to Accuweather Inc. These forecasts may be discouraging bids from some of the region’s most
expensive plants, said Kit Konolige, a utilities analyst for Bloomberg
Intelligence in New York.