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Spiking California Power Prices Evoke August Blackouts

Catherine Traywick and Mark Chediak

(Bloomberg) -- In the latest sign that California might have trouble meeting electricity demand during this weekend’s record-setting heat wave, power prices for Saturday evening spiked to the highest level since August’s rolling blackouts.

Electricity for delivery into Southern California during the 6 p.m. hour cleared at $800 a megawatt-hour, according to data from the California Independent System Operator. During the mid-August heat wave that triggered the state’s first rolling outages in 20 years, evening prices cleared at around $1,000.

“The market thinks things will be tight,” said BloombergNEF power analyst Brian Bartholomew. “There’s concern that demand could outpace available supply.”

The California Independent System Operator, which runs most of the state’s grid, said Thursday it isn’t expecting blackouts. But as of Friday afternoon, the ISO expected Sunday demand to peak at nearly 48 gigawatts. During the Aug. 14 blackout, the peak was 46.8 gigawatts.

“The resource planning for this weekend is going to be immensely tough for grid operators and generators alike,” said Campbell Faulkner, senior vice president at OTC Global Holdings, a power broker. “The grid looks like it could hit the 2006 record” for high demand.

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