Western US electricity prices highest since 2008

The Energy Information Administration (EIA) has determined the western U.S. wholesale electricity prices reached their highest levels since 2008 this summer, attributing the rise to high seasonal temperatures and fuel supply constraints.

Officials said within the area served by the California Independent System Operator (CAISO), peak-period electricity prices in July averaged $101 per megawatt-hour, the highest monthly average since the current day-ahead market began trading in April 2009.

As a means of bearing out the cause of the increase, EIA officials said summer 2018 temperatures were much warmer than average in the western United States. In June, July and August, the Portland, Oregon, area experienced 29 days with temperatures higher than 90 degrees, compared with 10 days during a typical summer.

Electricity load in the western states was particularly elevated during the last week of July, the EIA detailed, adding on July 24 and July 25, CAISO issued a Flex Alert asking customers to set their air conditioners at 78 degrees or higher and to avoid using appliances during peak hours.

The EIA said another reason for the high western electricity prices this summer was a sharp increase in natural gas fuel costs, particularly in Southern California. On July 24, natural gas prices at Southern California Gas Company’s (SoCal) Citygate, where natural gas enters SoCal’s local distribution system from the transmission pipeline, averaged $39 per million British thermal units (MMBtu), compared with an average price of $8 / MMBtu the previous week.