Spot power prices in the US Pacific northwest have more than doubled in the past month to more than $100/MWh on sustained cold weather and rising prices for carbon allowances in Washington state.
Prices for flow during the 16 peak hours today at Mid-Columbia, a series of large dams in central Washington, averaged $117.33/MWh and now far outstrip levels in the western third of the country. California prices were around $60/MWh for today and hubs in Arizona, Nevada and New Mexico were around $40/MWh.
The Washington cap-and-trade program launched on 1 January and the state held its first auction on 28 February. Daily assessments for the year 2023 are up by 21pc over the last month to $68/metric tonne for carbon.
Power market participants are willing to pay for hydroelectricity at Mid-Columbia because of uncertainty about their future carbon emissions, which rule out coal-fired power by statute in Washington.
Off-peak prices for the overnight eight hours tonight were $101.40/MWh. The northerly latitude of Seattle means it pulls out of the winter dark later than the rest of the country so lighting needs are greater. Regional daily low temperatures are near historical lows and natural gas prices at Sumas, Washington, are almost $1.50/mmBtu greater than at the Henry Hub in Louisiana.
Cooling degree days in Seattle so far this year are 31pc above normal. The convergence of cold weather and high carbon prices seems to have created an opportunity for any gas-fired power plant in the region to clear the market.
Mid-Columbia power supplies are typically abundant when precipitation is normal. Power prices have been known to be negative at some times in the year, meaning that generators pay buyers to dispatch the power in times of oversupply.
Mid-Columbia forward prices yesterday were $117/MWh for May through December for peak hours, according to Argus forward curves. Sumas natural gas prices were $4.12/mmBtu for the rest of the year, based on forward curves, which was 13pc more than today's spot price.
