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Balancing Congestion

The Federal Energy Regulatory Commission approved a change in PJM’s (the Mid-Atlantic grid operator) tariff, allowing them to shift what are called “balancing congestion” costs to load serving entities.  FERC approved PJM’s tariff revision with an effective date of June 1.  Suppliers have indicated that they intend to pass through these charges.  Suppliers include a change of law or regulation provision in their agreements.  Basically, they commit to a fixed price, but allow for pass-throughs when there is a change in law or regulation.  Please email or call to discuss the potential impact of these charges to you.

The Avalon Advantage – Visit our website at www.AvalonEnergy.US, email us at info@avalonenergy.us, or call us at 888-484-8096.

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Copyright 2017 by Avalon Energy® Services LLC

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What Does an Extended Cold Spell Look Like?

This is a follow up to our blog posted Monday evening titled “What Does a Cold Day Look Like?” and looks at the impact on real-time wholesale electricity pricing of extended cold weather.

We reported that as a result of Winter Storm Hercules barreling through the Mid-West, Mid-Atlantic and Northeast last Thursday and Friday (January 3 and 4), real-time wholesale electricity prices in the  PJM territory were elevated and volatile, ranging from negative prices to $739.70 per megawatt-hour ($/MWh) or $0.74 per kilowatt-hour (kWh).  For comparison, we noted that real-time wholesale prices in PJM averaged $31.21/MWh or $0.0321/kWh during 2012.  We also noted that during times of extremely cold weather, consumers pull out all of the stops.  Air circulation equipment runs longer and electric resistance heating kicks in.  The result is increased usage and high prices.

Moving ahead to Monday and Tuesday, January 6 and 7, the weather remained bitterly cold and the Polar Vortex moved further south.

The difference during this later two day period was that thermal mass (such as building foundations and walls, and the ground itself) had largely dissipated any retained heat.  The result was an increase in the amount of energy required to heat buildings and homes.

From 7:50 PM to 8:25 PM on Monday, January 6, real-time wholesale electricity prices exceeded $1,000/MWh across the entire PJM grid.  As an indication of how far south the cold spell reached, the peak price for the day of $1,238.77, which occurred at 8:10 PM, was in the East Kentucky Power Coop Zone.

Below are PJM real-time prices and system load during the 24 hours of Monday, January 6.

On Tuesday, January 7, real-time wholesale prices exceeded $1,000/MWH from 6:40 AM to 11:55 AM and then again from 5:30 PM to 5:55 PM.  Prices peaked in PJM at 7:15 AM at $2,450.54/MWh.  This occurred in the Dominion Zone.

Below are PJM real-time prices and total system load during the 24 hours of Tuesday, January 7.  Peak system load was reduced significantly by voltage reductions, voluntary customer conservation, and the implementation of demand response.  PJM reported 38,000 MW of generation outages.  Additional electricity supply was imported from two other RTOs – NYISO and MISO.

The table to the left below summarizes the PJM peak real-time wholesale electricity prices over the past four weekdays and shows the 2012 PJM total system average for comparison.  The table to the right shows the PJM total system peak demand which, at 141,483 MW on Tuesday, 1/7/14, represents a new PJM winter record.  The previous winter peak, which was about 5,000 MW lower, was set on 1/5/07.  The all-time system summer peak of 158,450 MW occurred during the summer of 2011.

For more on how electricity prices in the PJM Interconnection area can be affected by weather and other events (i.e., an earthquake), please see:

What Does a Superstorm (Sandy) Look Like?

What Does a Derecho Look Like?

What Does a Warm Day Look Like?

What Does an Earthquake Look Like?

Post Script – A reader in Connecticut sent us the following image indicating that it is also what an extended cold spell looks like:

The Avalon Advantage – Visit our website at www.avalonenergy.us, call us at 888-484-8096, or email us at jmcdonnell@avalonenergy.us.

Note:  Data and graphs from PJM.com

Please feel free to share this article.  If you do, please email or post the web link.  Unauthorized copying, retransmission, or republication is prohibited.

Copyright 2014 by Avalon Energy® Services LLC 

 

 

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What Does a Cold Day Look Like?

In previous blog posts, we have examined how weather and other events affect electricity prices.

What Does a Superstorm (Sandy) Look Like?

What Does a Derecho Look Like? 

What Does a Warm Day Look Like?

What Does an Earthquake Look Like?

We continue this series by looking at how electricity prices in the PJM Interconnection area can be affected by cold weather.

Winter Storm Hercules brought snow and cold temperatures to the northeast United States on Thursday and Friday, January 2 and 3, 2014.

Because of heavy cooling loads, electricity usage and wholesale electricity prices in the PJM area during the summer tend to be substantially higher than usage and wholesale prices during the winter.  Most air conditioners are powered by electricity whereas much of the winter heating load is carried by natural gas and, to some extent, fuel oil.  However, during times of extremely cold weather, consumers pull out all of the stops.  Air circulation equipment runs longer and electric resistance heating kicks in.  The result is increased usage and high prices.

The map below shows real-time wholesale electricity prices at 5:40 PM on January 2.  As is typical, electricity prices are higher in the eastern part of PJM (PJM-East), where most of the load is located, than in the western part of PJM (PJM-West), where most of the generation is concentrated.  Real-time prices differences in PJM are a result of the costs associated with transmitting electricity from generating facilities (source) to load (sink) and the related line losses.  On the map, the price scale in the bottom left corner of the map is in dollars per megawatt-hour ($/MWh).

The east-west differentiation in prices is dramatic.  The table below shows prices in dollars per megawatt-hour ($/MWh) and dollars per kilowatt-hour ($/kWh) for six delivery zones.  For comparison, real-time wholesale prices in PJM averaged $31.21/MWh or $0.03/kWh during 2012.

Summer electricity prices also tend to be substantially more volatile than winter prices.  But, extreme weather, hot or cold, can drive price volatility and at times, winter prices can exhibit strong volatility.  Below is a dramatic example.  While prices in North Jersey (PSEG Zone) were high, around $500/MWh, prices in West Virginia and western Virginia were negative.

This was a result of transmission constraints brought about by the heavy demand in PJM-East and the inability of many coal fired generating plants in PJM-West to ramp down quickly.  In other words, while there was great demand for electricity in PJM-East, there was temporarily insufficient transmission capacity to move electricity from west to east.  These transmission constraints developed more quickly than generation in PJM-West was able or willing to curtail their output.  The result was that, rather than receive revenues for their output, generators had to pay to deliver their energy into the system.

After a continued day of volatile prices, by 11:35 PM electricity prices had moderated significantly over the entire grid.  As shown on the graph below, prices had fallen to the $20/MWh to $40/MWh range.

However, Friday, January 3 brought more cold temperatures…

…and more volatility.  At 2:05 AM on Friday, January 3, less than three hours after the snapshot above, prices spiked, exceeding $700/MWh in northern New Jersey.

During the remainder of Friday, prices continued to exhibit a strong East-West differentiation…

…but showed some periods of quiescence:

…as well as across the board extremely high prices:

The graph below shows real-time prices throughout the entire day:

This graph shows PJM total system wide load over the day.  Peak demand was 128,611 MW.

The Avalon Advantage – Visit our website at www.avalonenergy.us, call us at 888-484-8096, or email us at jmcdonnell@avalonenergy.us.

Note:  Electricity price data and graphs from PJM.com.

Please feel free to share this article.  If you do, please email or post the web link.  Unauthorized copying, retransmission, or republication is prohibited.

Copyright 2014 by Avalon Energy® Services LLC