Heat Wave Causes Electricity Prices to Spike in PJM

 

The heat wave that was present in the Northeast and Mid-Atlantic last week caused a spike in electricity demand which in return increased hourly prices in the electric wholesale market.  Weather is the key variable for electricity demand.  Warmer than average weather causes an increase in demand as people turn their air conditioning down, forcing reliability concerns as wires and transformers overheat.

Customers on variable rates in the Northeast and Mid-Atlantic might see an increase on their next bill.  Larger commercial customers who are on an electricity contract tied directly to the PJM wholesale market will almost certainly see a significant increase on their rate from the last few months.  Residential and small commercial electric customers on a variable rate will see an increase depending on how much of the daily market their provider depends on.  Those providers who rely on the daily market for their entire customer base will be in a lot of trouble as they will be forced to pass the electric rate spikes right onto their customers.

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