Heat wave drives U.S. West power prices to highest since February freeze

FILE PHOTO: Power lines are shown as California consumers prepare for more possible outages following weekend outages to reduce system strain during a brutal heat wave amid the outbreak of coronavirus disease (COVID-19) in Carlsbad, California, U.S., August 17, 2020. REUTERS/Mike Blake

(Reuters) – Extreme heat expected to blanket the U.S. West next week caused power prices for Monday to soar to their highest since the February freeze when natural gas pipelines and wind turbines froze in Texas leaving millions without power.

High temperatures will reach the low 90s F (about 34 C) in Los Angeles on Monday-Wednesday, which is about 20 degrees higher than the city’s normal high for this time of year, according to AccuWeather forecasts.

Last summer, a heat wave in August forced California utilities to impose rotating blackouts that left over 400,000 homes and businesses without power for up to 2-1/2 hours when energy supplies ran short.

The group responsible for North American electric reliability has already warned that California is the U.S. region most at risk of power shortages this summer because the state increasingly relies on intermittent energy sources like wind and solar, and as climate change causes more extreme heat events, drought and wildfires across the U.S. West.

Power traded on Friday for Monday delivery jumped to $151 per megawatt hour (MWh) at Palo Verde in Arizona and $95 in SP-15 in Southern California, their highest since the February freeze caused prices across the country to soar.

In addition to soaring power prices, gas for the rest of 2021 in California has traded at its highest in years on expectations an extreme drought in the U.S. West will cut hydropower supplies and force the state to rely more on gas-fired power plants this summer.

That would make it tough for California to reduce carbon dioxide emissions this year and shows how difficult it would be for the most-populous U.S. state to keep the lights on if it starts shutting gas-fired plants in the coming years as it moves toward getting all electricity from carbon-free sources by 2045.

(Reporting by Scott DiSavino; Editing by Steve Orlofsky)

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