Cold spell expected to increase US Northeast power demand, prices during week of Jan. 15

Northeast US power prices are likely to increase as a cold snap moves through the country hitting the Mid-Atlantic and Northeast during the week of Jan. 15, which has increased power demand forecasts and prompted PJM Interconnection to alert stakeholders that offers above $1000/MWh must be verified by the grid operator.

"As significantly cold weather approaches the PJM region over the coming holiday weekend, PJM is providing its updated peak load forecast for Sunday, Jan. 14, through Wednesday, Jan. 17, when single-digit temperatures will move across portions of PJM's Western Region," the grid operator said in a Jan. 12 statement.

Given the weather and pipeline fuel restrictions reported by natural gas pipeline operators, PJM said it will be in "Conservative Operations" for all of Jan. 13, through all of Jan. 17.

On Jan. 11, PJM issued a "Cold Weather Alert" for its Western Region for Jan. 14 to Jan. 17 in advance of an expected cold front in that area.

The grid operator said it normally issues this alert when actual temperatures are projected to fall near or below 10 degrees Fahrenheit, but PJM can also issue the alert if high winds are forecast or if a portion of gas-fired units may be unavailable due to potential gas procurement issues.

A conservative operations declaration allows system operators more flexibility to make decisions to maintain reliability with no action requested from the public.

"For example, when Conservative Operations is declared, PJM Dispatch reviews and considers recalling or canceling noncritical planned generation and transmission maintenance outages and may reduce transfers of electricity into, across or through the PJM system," according to the statement, adding that these and other potential actions can be taken to increase power reserves and reduce power flows on selected facilities.

Increased power demand

Power demand across the PJM footprint is forecast to reach 130,908 MW on Jan. 17, according to the grid operator's seven-day load forecast. PJM has forecast power demand to peak at about 137,000 MW this winter. PJM's all-time winter peakload reached 143,295 MW on Feb. 20, 2015. PJM peakload averaged 98,818 MW in December 2023.

When a cold weather alert is issued, PJM communicates with power plant owners telling them to be prepared to call in additional staff to get all generating units running for when electricity use begins to increase in the morning, the grid operator said.

Generator owners need to take extra care to maintain equipment so that it does not freeze in the cold and are reminded to provide updated information to the grid operator on limitations to their units, including time required to start and the maximum and minimum times that their units can run once started, PJM said.

"Keeping PJM informed of changing generator conditions, particularly as natural gas pipelines may become constrained as the cold spell progresses, is particularly important over the Martin Luther King Jr. Day holiday weekend," the grid operator said.

PJM also alerted stakeholders that the Cold Weather Alert has increased the likelihood of the need for power market sellers to use PJM's offer verification process requiring validation of incremental energy offers above $1000/MWh prior to being eligible to set locational marginal prices.

Energy offers greater than $1,000/MWh that fail initial validation are capped at $1,000/MWh in PJM's computer system.

Higher power demand is also expected in New York Independent System Operator and ISO New England territory based on their load forecasts. NYISO peakload is forecast to reach 21,914 MW on Jan. 17, the highest level in the current forecast.

ISO-NE peakload is forecast to reach 18,000 MW on Jan. 17.

No major forward power price changes were observed in the ISOs during the morning of Jan. 12.

In spot pricing, PJM West Hub on-peak for Jan. 15 delivery was trading around $171/MWh on the Intercontinental Exchange, up about $35 on the day, while balance-of-the-week for Jan. 16-19 delivery rose similarly to trade around $194/MWh.

In NYISO, the Zone G balance-of the-week on-peak contract was valued around $177/MWh, rising more than $20 from its previous settlement. Meanwhile, ISO-NE Mass Hub on-peak for the same delivery was valued around $162.50/MWh, up about $7 on the day.