(Bloomberg) -- California is facing electricity shortagesas abnormally high temperatures and plant outages challenge aregion already grappling with limited natural gas supplies and adrought. Power prices surged on Wednesday to the highest level inalmost two years.

|

Calls to conserve energy


The manager of the state’s power system called on generators tosuspend maintenance through Friday night, while also askingconsumers to conserve energy. More than 3,700 megawatts of powergeneration capacity was offline Wednesday, up 19 percent from a dayearlier, according to the California Independent SystemOperator.

|

The threat of shortages on Wednesday adds to the mountingchallenges that California’s power market is facing thissummer. The state has warned that Southern California may seeblackouts on as many as 14 days after a massive natural gas leak ata Sempra Energy complex limited supplies to electricitygenerators.

|

Historic drought


PG&E Corp. has also had to close some storage wells, and ahistoric drought has plagued the western U.S. in recent years,curbing hydropower resources.

|

“With high loads, some forced plant outages and reduction inimport capacity, it is expected to be a tight day system-wide,”Steven Greenlee, a spokesman for the California Independent SystemOperator, said by e-mail Wednesday.

|

On-peak, day-ahead power at a Southern California hub surged 29percent to average $62.44 a megawatt-hour Wednesday on theIntercontinental Exchange, the highest level since September2014.

|

Gas leaks


The capacity from a unit at the Redondo Beach power plant inSouthern California was curtailed as of Wednesday afternoon byalmost 500 megawatts, and capacity from the Big Creek hydropowercomplex was down by about 380 megawatts, according to a CaliforniaIndependent System Operator report.

|

Temperatures in Los Angeles were forecast to reach as high as 89degrees Fahrenheit (32 Celsius), 5 more than average, on Wednesday,according to AccuWeather Inc. in State College, Pennsylvania.

|

“Prices across the region are expected to be elevated,” ChrisDaCosta, a Boston-based power market analyst for Genscape Inc. whotracks real-time data in the California ISO, said by e-mailWednesday. “We’re in the mid $50s for our base case but there is aton of upside on that number.”

|

Related: Future is bright for renewable energymarket

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.