February Cold Weather Alert

Impending cold to be intense, but fall short of January event.

Energy end users in the Midwest and South Central should be preparing for the current cold snap to ramp up considerably in the coming days. Current outlooks call for cold weather to peak on Thursday, February 20 in these areas, with population-weighted heating degree day (PWHDD) totals approaching but not meeting levels experienced during the major cold snap in January.

As opposed to the January event, the heart of the cold is largely expected to stay out of the East, which is contributing to lower overall U.S. PWHDDs. However, Midwest and South Central totals are expected to peak at levels that rival the cold shot experienced last month. Those are the regions most at risk of elevated spot pricing for natural gas and electricity in the coming days, but end users in the East should also be on high alert.

The latest cold snap peaked during the period stretching from January 19 through 21, with spot natural gas pricing exceeding $10 per MMBtu in the Midwest and South Central and nearing $100 per MMBtu at some points in the East. Day-Ahead power prices during that period easily exceeded $100 per MWh across these regions as well. Current indications show the strong potential for a repeat of this type of price environment in the coming days — especially in the Midwest and South Central.

We recommend end users that are exposed to spot energy prices make preparations to reduce consumption where possible or otherwise take measures to reduce exposure to volatility.

If you have any questions about your current situation and how to best prepare for the upcoming cold, please reach out to Andy Huenefeld, Managing Partner with Pinebrook Energy Advisors at 502.718.1582 or [email protected].