US power/natgas prices soar as heat wave boosts air conditioning use

© Reuters. FILE PHOTO: Overhead power lines are seen during record-breaking temperatures in Houston, Texas, U.S., February 17, 2021. REUTERS/Adrees Latif/File Photo

(Reuters) - U.S. power and natural gas prices spiked in several regions on Thursday as homes and businesses cranked up air conditioners to keep cool as a brutal heat wave blanketed most of the country.

In Texas, power demand hit a record high for a third day in a row. In New England, power prices rose to their highest since January 2018.

Electric grid operators across the country said they have enough resources to meet demand. So far they have only taken small steps to maintain reliability, like asking utilities to postpone maintenance on power lines and generating plants.

Several utilities asked consumers to conserve energy and activated demand response programs that compensate homes and businesses to reduce usage.

The United States is expected to use record amounts of power in 2022 due mostly to rising economic and population growth in Sun Belt states like Texas.

AccuWeather forecast high temperatures in New York, the nation's biggest city, would rise from 95 Fahrenheit (35 Celsius) on Thursday to 98 F on Sunday. That compares with a normal high of 84 F.

In New England, next-day power jumped by 29% to $258 per megawatt hour (MWh) for Thursday, its highest since January 2018. Spot gas soared over 200% to $29.35 per million British thermal unit, its highest since January 2022.

Traders said such high gas prices make it practical for some New England power generators to burn oil instead of gas, something that usually only occurs in the winter.

The Electric Reliability Council of Texas (ERCOT), which operates the grid for more than 26 million customers representing about 90% of the state's power load, said power use hit 79,828 MW on Wednesday, its third all-time high in a row.

Real-time prices in ERCOT topped $1,000/MWh for a couple of hours on Wednesday. That compares with a five-year (2017-2021) of $56 at the widely-traded ERCOT North Hub, which includes Dallas.

One megawatt can power around 1,000 U.S. homes on a typical day, but only about 200 homes on a hot summer day.