America's Power Grid Shows Signs of Strain Amid Deep Freeze

(Bloomberg) -- America's power grid is starting to show signs of fatigue as the nation grapples with a record-breaking cold snap.

In the Midwest, some natural gas plants are having trouble getting supplies, forcing outages and increased use of fuel oil, Dustin Smith, a spokesman for the Southwest Power Pool, said on Tuesday.

Some power plants in New England that have been burning oil are running short on fuel, according to Marcia Blomberg, a spokeswoman for ISO New England Inc., the region's grid operator. Restrictions governing air emissions are also a factor limiting their use.

“As oil inventories are depleted, replenishment of these fuels will be important given the uncertainty around weather and future fuel demands for the remaining two months of the winter period,” she said by email on Tuesday.

Oil, a scant contributor to the nation's power supply in normal weather conditions, has accounted for about 30 percent of New England's electricity in recent days after temperatures plunged below freezing. A lack of pipeline capacity has constrained gas supplies to the region in recent years, causing prices to surge during severe cold snaps. 

Nonetheless, spot power on PJM Interconnection LLC's benchmark Western hub fell 3.7 percent to $124.96 a megawatt-hour between 10 and 11 a.m. local time, according to Genscape Inc. data compiled by Bloomberg. Across the PJM grid earlier Wednesday morning, the load exceeded 136,000 megawatts, up 1.8 percent from yesterday and the highest since February 2015.

PJM has experienced no fuel supply issues over the past two days, spokeswoman Susan Buehler said by email.

Still, two power generators said on Tuesday that they've been able to overcome challenges posed by the weather.

American Electric Power Co. has “been able to respond to demand as needed,” despite “equipment challenges that typically accompany very cold temperatures,” Melissa McHenry, a company spokeswoman, said in an email.

“With few exceptions, our plants are running well,” David Byford, a spokesman for Houston-based Dynegy Inc. said in an interview.

--With assistance from Tim Loh and Christopher Martin

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Will Wade, Millie Munshi

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