Conditioning

Having gotten a negative signal from prior-day futures trading and not yet seeing enough air conditioning load to make a difference, cash prices fell across the board Thursday.

As on Friday, the cash market was mixed and mostly softer again Monday. However, with air conditioning load starting to rebuild gradually in the South and already being well established in the Southwest, Monday’s trading featured were more flat to moderately higher points in the mix than on Friday.

Although air conditioning load in the South will slacken Friday under a widespread set of thunderstorms and weather-related demand remains scarce elsewhere, cash prices made it a solid four-for-four days of bullish performance so far this week Thursday.

Maryland electricity customers may be turning off their lights and lowering their air conditioning this summer following an announcement by the Public Service Commission of Maryland (PSC) last week that some electric bills could jump by as much as 72% due in part to increased fuel prices, which has hiked the costs to utilities of buying electricity for retail distribution.

Rolling blackouts are generally considered a scourge of hot summer days when electricity demand for air conditioning pushes generation and transmission beyond capacity. However, electric utilities that rely on gas-fired generators are vulnerable during the winter due to the potential for gas well freeze-offs. Xcel Energy and some of its Colorado customers found this out over the holiday weekend.

Rolling blackouts are generally considered a scourge of hot summer days when electricity demand for air conditioning pushes generation and transmission beyond capacity. However, electric utilities that rely on gas-fired generators are vulnerable during the winter due to the potential for gas well freeze-offs. Xcel Energy and some of its Colorado customers found this out over the holiday weekend.

Despite having already lost or being about to lose a significant amount of power generation load for air conditioning in key market areas, the cash market was able to ride a prior-day screen advance of 14.1 cents along with whatever cooling load will remain Thursday to mostly moderate gains at a majority of points on Wednesday.

Prices rose across the board Tuesday based on a screen spike of nearly 33 cents the day before and still substantive (but dwindling) air conditioning load. Upticks ranging from nearly a dime to a little more than 40 cents were distributed fairly evenly among the various market regions, although California quotes tended to see the smallest increases.

According to WSI Corp.’s latest forecast released last week, lots of sunscreen and air conditioning could be a necessity this summer as the company expects temperatures to average warmer-than-normal in most locations, with the exception of the Pacific Northwest and along the western Gulf Coast, which are likely to see cooler-than-normal temperatures.