As another heat wave stressed the power system in the Midwest and East, several nuclear plants across four states were shut down early Wednesday morning, due to unforeseen maintenance issues. On Tuesday, system wide PJM demand set a 2012 record of 155,100 MW which was above the expected 2012 peak of 153,780 MW. New York City also experienced elevated load as Con Edison reported a new 2012 peak of 12,836 MW but below the all-time max of 13,189 MW recorded in July 2011. Four nuclear reactors were pulled offline Tuesday and Wednesday for various maintenance-related problems. Nation-wide nuclear outages were increased by 1,700 MW to 9,200 MW (9% of total capacity) as a result of the unplanned outages.
Natural gas futures jumped approximately 3% on Wednesday and are currently trading near seven month highs. Since the lows experienced back in late April, the prompt-month contract has risen 59%. The daily average real-time power price for New York City rose throughout the week and peak on Wednesday at nearly $70/MWh while intraday hourly markets cleared as high as $167/MWh (see chart).
When baseload power generation such as nuclear or coal are temporarily off line due to refueling and maintenance repairs, supply output must be backfilled to maintain adequate market reserves. Intermediate power sources like natural gas typically fill the supply gap, and higher output levels from natural gas plants result in short-term demand pressure for the input fuel. This tends to support near term prices until the baseload units are back online providing power to the grid. The current nuclear outages schedule is projected to peak in October, and most grids are expecting higher outages than a year ago. Customers should be aware of this switching activity which could lead to additional price volatility this fall.