A cold blast brutal enough to rival temperatures at the South Pole is sending demand for power and natural gas soaring in the U.S. Midwest, pushing prices sharply higher.
The National Weather Service warned of a life-threatening chill and widespread record lows from the upper Midwest through the Ohio Valley. Chicago’s O’Hare International Airport plunged as low as minus 23 degrees Fahrenheit (minus 31 Celsius) Wednesday, compared with minus 27 degrees at the Amundsen-Scott South Pole Station in Antarctica, U.S. government weather data show.
PJM Interconnection LLC, operator of the grid stretching from Chicago to Philadelphia, expects usage to exceed a four-year winter record. Generators have been asked to check power-plant equipment and fuel supplies to make sure there are no interruptions.
“We’re asking them to defer maintenance and bring on extra people because we need everyone on board,” Jeff Shields, a spokesman for PJM, said in an interview Wednesday.
Gas demand in the Midwest surged about 50 percent over the past two days to the highest in BloombergNEF data going back to 2014.
Demand on the PJM grid may reach 135.9 gigawatts Wednesday and 143.5 gigawatts Thursday, the most since Feb. 20, 2015, according to its website.
At PJM West near Chicago, power for immediate delivery jumped 44 percent to $42.35 a megawatt-hour at 1:11 p.m. Eastern time, according to Genscape data. In Minnesota, power for delivery starting at 6 p.m. local time Wednesday jumped to $104.35 a megawatt-hour, the highest in more than a year.
Spot natural gas for next-day delivery at the Michigan Consolidated hub, serving Chicago, jumped 48 percent to $4.55 per million British thermal units in trading Wednesday, according to David Hoy, an energy trader with Dynasty Power in Calgary. That’s the highest since November, data compiled by Bloomberg show.
DTE Energy Co. in Detroit and Minneapolis-based Xcel Energy Inc. are asking customers to turn down their thermostats to take pressure off power systems struggling to meet winter heating demand.
Power suppliers are starting up older coal and gas facilities that are only needed when demand surges. J-Power USA Development Co.’s Elwood Energy gas plant, about 50 miles (80 kilometers) southwest of Chicago, ramped up to 1,200 megawatts early Wednesday, after averaging 61 megawatts for the past 30 days at the same time, according to Genscape’s morning power report. Output from all U.S. generating sources — coal, gas, hydro power, nuclear, oil, pumped storage and wind — is up 9.4 percent from Tuesday.
Though power and gas prices are getting a boost, the current freeze-out isn’t like the polar vortex of 2014 or the “ bomb cyclone” in January 2018 that dumped snow as far south as Florida and drained fuel supplies, said Adam Jordan, director of power analytics at Genscape. For one, it won’t last as long as those events, and this time grid operators are better prepared to handle temporary freezes.
“This event just won’t last long enough,” Jordan said in an interview. Gas wells and pipelines should continue to deliver supplies and the Northeast has added capacity to import the fuel. “The infrastructure can handle a two- or three-day freeze.”