Average wholesale electricity prices in most regions within the United States have increased over the past year (2022), with disruptions in generation sources.
The US Energy Information Administration said in a report issued on Tuesday (January 10, 2023) that the average price of electricity in the main centers was high on an annual basis in 2022, with the exception of the Electricity Reliability Council in Texas (إot), the operator of electricity in the state.
In addition to the vagaries of the weather, a shortage of coal supplies and rising natural gas prices have led to higher electricity prices in America, according to the report, which was reviewed in detail by the Energy Research Unit.
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The impact of weather fluctuations on rising electricity prices
4 severe weather-related disturbances caused wholesale electricity prices to rise in the United States, over the past year:
The first - January: cold weather and a winter storm, combined with restrictions on natural gas pipelines in New England, led to an increase in wholesale electricity prices within the same region, reaching an average of 160 dollars per MW/hour.
The second-July: electricity demand rose to a record level in the state of Texas, due to the heat wave, which forced the electricity operator to increase generation from natural gas despite its high prices, which pushed electricity prices in the state to rise to 182 dollars per megawatt/hour.
Despite this, prices were low in total in 2022, compared to 2021, with the price of electricity rising to 1800 dollars per megawatt hour in February 2021, due to the storm "Yuri".
Third - early September: the heat wave in the western United States led to an increase in electricity prices in the northwest region to 224 dollars per MW/hour, and prices reached 134 dollars per MW/hour in California, with an increased dependence on natural gas to meet demand.
Fourth-December: electricity prices witnessed a record high in the western Pacific regions of the United States with cold weather and winter storms, which translated into an increase in the wholesale electricity price at 283 dollars per megawatt hour in the northwest region, and 257 dollars per megawatt hour in California.
Factors affecting the rise in electricity prices
The rise in natural gas prices was a key driver for increasing the wholesale electricity price in the United States, especially as it is the main source of electricity generation in the country, according to information obtained by the Energy Research Unit.
In January 2022, global natural gas prices continued their upward trend, driven by economic growth in Asia and pipeline restrictions, and prices in the United States also increased as American liquefied gas exports to Europe increased.
American natural gas prices in Henry Hope rose from 3.70 dollars per million British thermal units in early January 2022 to about 10 dollars in late August 2022.
While mild temperatures and increased natural gas production reduced gas and electricity prices after the heat wave in September until early November 2022, they rose again with the colder weather during December.
In addition to rising natural gas prices and severe weather in 2022, labor shortages at railways and coal mines restricted supplies to power plants throughout the summer, limiting the ability of plant operators to switch from expensive natural gas to relatively cheaper coal.
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