Extreme Cold and the Day Ahead-Electricity Market

The Ameren Illinois region has been experiencing extremely cold and record breaking temperatures during the recent weeks. This is having an impact on the region’s day-ahead electricity market.

Any sudden and significant cold snap can drive up demand for electricity, push up the cost of natural gas making it more expensive to operate natural gas fired power plants, cause power plant outages, and require the use of expensive peaking generation that uses oil as its fuel. All of these factors can increase the market price of electricity. This particularly intense cold snap has produced record-breaking winter electricity demand, and day-ahead prices have been higher than what is typically seen during the winter.

For more on seasonal price patterns and tips for managing electricity costs during the winter, click here.