U.S. spot gas prices in Southern California fell to a record low for Tuesday, while power in Arizona and California remained negative amid low energy demand over the Memorial Day holiday weekend and ample cheap hydropower and other renewable supplies.
Negative prices signal there is too much power or gas being produced in a region. Energy firms can either reduce output, pay someone to take their power or gas, or, if they can get a permit, flare unwanted gas.
Next-day gas prices at the Southern California (SoCal) Border slid to a record low of 92 cents per million British thermal units (mmBtu), down from $1.20 before the Memorial Day holiday weekend.
That broke the prior SoCal Border all-time daily low of $1.14 per mmBtu set in June 2019, and compares with an average of $1.58 so far in May, $2.53 so far in 2024 and $6.78 in 2023.
Next-day gas prices at the PG&E hub in Northern California, meanwhile, fell to $1.63 per mmBtu, their lowest since June 2019.
In the power market, next-day prices fell to a seven-week low of negative $17.50 per megawatt hour (MWh) at the Palo Verde hub in Arizona and a four-week low of negative $18.50 at South Path-15 in Southern California.
That compares with Palo Verde averages of positive $4.54 per MWh so far in May, positive $18.79 so far this year and positive $59.03 in 2023, and SP-15 averages of positive $3.25 per MWh so far in May, positive $18.89 so far this year and positive $59.86 in 2023.
U.S. next-day power and gas prices have turned negative several times already in 2024, especially in Texas, Arizona and California.
Next-day power prices at Palo Verde in Arizona have averaged below zero 18 times so far this year versus just once in the past in 2019. SP-15 prices, which never averaged below zero before this year, have already hit that mark 15 times.
(Reporting by Scott DiSavino, Editing by Nick Zieminski)