Heat wave pushes up Central US power prices; MISO prepares for peakload record

Sweltering heat continues to push up power prices in the Central US, where the Southwest Power Pool set a peakload record of 56.18 GW Aug. 21 and the Midcontinent Independent System Operator was forecasting a record-smashing 130 GW of demand Aug. 24.

In preparation for the soaring demand, MISO notified all local utilities in its footprint to prepare every available resource to serve the projected load, the grid operator said in a statement late Aug. 21.

"We anticipate challenging operating conditions throughout the entire week, and we will need every available resource at some point," Jessica Lucas, MISO executive director for system operations, said in the statement.

MISO also issued a maximum generating emergency alert, effective from 12 pm ET until 10 pm ET Aug. 24.

MISO is forecasting peak demand of 119 GW Aug. 22, 127 GW Aug. 23 and 130 GW Aug. 24, before dropping back to 119 GW Aug. 25, according to MISO's Multiday Operating Margin Forecast Report. If the grid operator hits 130 GW of demand this week, it would far exceed current peakload record of 127 GW set on July 20, 2011.

In MISO Central, Indiana Hub day-ahead peak climbed nearly $15 to $66/MWh during Aug. 22 trading for Aug. 23 delivery, and its balance-of-the-week peak contract was bid at $78/MWh and offered at $90/MWh on the Intercontinental Exchange, in range to its previous settlement of about $81/MWh.

SPP record

While the highest demand is yet to come in MISO, SPP may already be past the peak of this heat wave. After hitting 56.18 GW at 4:27 pm CT Aug. 21, SPP demand for the coming days is expected to stay below 56 GW, according to SPP's Mid-term Load Forecast.

SPP issued a conservative operations advisory for its footprint in the eastern interconnection effective 11 am CT through 9 pm CT Aug. 22. The advisory was declared due to high load forecast, loss of generation, wind forecast uncertainty and severe heat, SPP said.

While the SPP advisory does not require the public to conserve energy, some utilities encouraged customers to look for opportunities to cut back.

"We have enough power to meet demand with sufficient resources in reserves, but supplies will be tight over a wider area of [SPP] this week," Adrian Rodriguez, president of Xcel Energy-New Mexico, Texas, said in a statement Aug. 22.

"If we're aware of how we're using energy and look for opportunities to cut back, it will help us and our neighbors get by without any issues," Rodriguez said.

Despite a $22.75 decline in its spot price for Aug. 23 delivery on ICE, SPP South Hub day-ahead peak pricing remained elevated at $93.75/MWh, and balance-of-the-week peak prices for Aug. 24-25 were bid at $95/MWh, a nearly $14 rise from its previous settlement.

PJM prices rise

PJM Interconnection issued a hot weather alert for its Western Region effective from 7 am ET to 11 pm ET Aug. 23, noting that temperatures are expected to reach the mid- to upper 90s with high humidity in that region. PJM had issued regionwide hot weather alerts for Aug. 21 and Aug. 22.

PJM expects to serve a forecast load across the RTO of around 125 GW Aug. 22 and around 128 GW Aug. 23, PJM said in a statement. PJM's peak record of 165.56 GW was set on Aug. 2, 2006, the statement said.

PJM West Hub day-ahead on-peak was valued about $1.75 higher on ICE to price about $37.75/MWh for Aug. 23 delivery. The biggest changes were seen in the Midwest, where AEP Dayton Hub rose about $7 to around $43.75/MWh while North Illinois Hub shot up some $31 to trade at $66.25/MWh on ICE. The corresponding West Hub and NI Hub Aug. 23 spread traded at minus $28/MWh on ICE, a notable change from its previous settlement of about $1/MWh.

West Hub balance-of-the-week peak Aug. 24-25 stepped up about $2 to around $51.25/MWh on ICE.

Heat alerts have been issued from Minneapolis to New Orleans, which includes 22 states and roughly 100 million people, the National Weather Service said.

"When factoring in brutal humidity levels, maximum heat indices could approach 120 degrees," the weather service said.