Last Friday (July 19th, 2013) temperatures in New York City rose to 100 degrees Fahrenheit for the second day in a row. At 4:00 PM that day the New York Independent System Operator (NYISO) recorded a new State record peak power demand of 33,956 MW. In New York City (known as “Zone J”) real time power prices jumped as high as $1485/MWh. Today we examine the power price volatility.
Last Thursday (January 31, 2013) a high frequency trading event about 400 milliseconds before the scheduled EIA Storage data release set off a frenzy of selling in the NYMEX Natural Gas futures market. Some analysts believe that the storage report could have been leaked. Others blamed computer timing issues. These events resurrected ghosts of EIA storage numbers past and inspired our examination of these developments in the context of the evolution of high frequency trading in energy markets.
<p>We just finished up the hottest July on record. Very high temperatures cause air conditioning demand to go ballistic. System operators struggle to generate enough power to satisfy peak load and call on expensive “peaker” generation units that set a high market price for power.</p>
