Jan

8

 Yesterday, eastern US states ran out of power plants. Today, the challenge is not as daunting, but if you live or work in the DC-to-NYC corridor, please turn off your lights — or we might do it for you.

PJM Interconnection, the electricity grid operator for more than 61 million people in 13 states and the District of Columbia, is extending its appeal for the public to conserve electricity into Wednesday morning. The call for conservation is prompted by the continuing arctic weather across the region PJM serves which is driving electricity consumption to record levels.

Early this morning, market prices for wholesale power ramped up. By 07:00, they reached $400 per megawatt-hour in Mid-Atlantic states. NYC's prices passed $300. Demand will continue grow until the peak arrives, which is normally around 5 PM local time.

From Chicago to Boston, grid operators are making phone calls asking large power users to voluntarily drop load. Grids will offer cash for some consumers to quit consuming. Those with thin tariffs (low cost and low reliability) will find their power automatically curtailed.

In the meantime, power markets are rewarding almost everything in the inventory, including oil. If you have a standby diesel generator, it may pay to run it for a few hours. In fact, it appears that is what may be happening.

Carder Dimitroff adds: 

This will benefit generating companies like Exelon (EXC), NRG Energy (NRG), Calpine (CPN). It will benefit transmission line companies like ITC Holdings (ITC) and AEP. It will also benefit demand-response companies like EnerNOC (ENOC), Comverge (private) and OPower (soon-to-be-public)

It will not help or hurt local distribution companies like Pepco Holdings (POM) or Consolidated Edison (ED). These companies only provide transportation services.

While these numbers are huge, they will not have much impact on Q1 earnings. It is a flash in the pan. Cold weather will clear and low prices will return. Worse for producers, 40 degrees now feels like 60. As a result, consumers' conservation habits have become embedded. Those habits will continue until summer.


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