How high are electricity prices in California? – Energy Institute Blog

Wholesale electricity prices soared during California’s September heatwave.

Hot hot hot! What a wonderful way to start September, record high temperature All of California, and a test of the state’s electricity market.More California families Air-conditioned More than ever, it pushed electricity demand to an all-time high.

For today’s post, I wanted to see what happened to wholesale electricity prices.Like many of you, I’ve been checking CAISO Price Chart Throughout the heatwave, but now that temperatures and prices have come back down, I want to take a closer look at what’s going on.

There will be time to analyze why later, but the purpose here is to start unraveling what. How much has the price gone up? How does the price change in a few days? How do prices change over time?

unforgettable september

In retrospect, the first eight months of 2022 look rather lacklustre. The chart below plots the daily average price during peak hours. Each observation is a day, and I focus on the price of the market the previous day, as these data are the easiest to obtain.

During the first eight months of the year, California peak-hour prices averaged less than $100 per megawatt-hour.

Then it gets hot. The September heatwave was historic in intensity and length.Air conditioners push power demand to new history September 6 (over 52,000 MW!).

So far in September, the average day-before-peak electricity price has exceeded $450 per megawatt-hour. Electricity prices were well above normal throughout the month, but September 6th, 7th and 8th saw the highest prices.

evening peak

The above image focuses on 4pm to 8pm. Why these times? Because these evening hours are now unquestionably the peak of California’s late summer. The chart below plots the average price by hour of the day. During the first 9 days of September, prices peaked between 4pm and 8pm.


This makes sense.Air Conditioning Continues During These Hot Days Heavy use in the afternoon and evening, even as solar power fades. For good reason, CAISO prefers 4pm as the starting point for Flex Alerts.


Home prices soar statewide

Day-ahead prices were similar in different parts of the California market during the heatwave. The chart above shows prices in Northern California (NP15), but the patterns in Central California (ZP26) and Southern California (SP15) are very similar.


Of course, the prices in these different price areas are not always the same. Large divergences are often seen when transmission restrictions are bound within California. But — for this heatwave — the challenge is really the overall balance between supply and demand across the state, and the ability to import electricity from out of state.

Amber Alert

On Tuesday, September 6 at 5:48 pm, the California Office of Emergency Services sent a emergency text message 27 million Californians are urging them to use less electricity. Text seems to workelectricity demand 1,200MW drop between 5:50pm and 5:55pm.


The text was completely unexpected, so the impact won’t be noticeable in day-ahead prices. However, looking at prices from the previous day, prices on Tuesday night were a real challenge from an electricity market perspective. Wholesale prices hit $1,200 per MWh on Tuesday (9/6) and Wednesday (9/7), some of the highest prices in recent memory.


quite a test

All in all, this is quite a test for California’s electricity market. In the face of extreme temperatures and record power demand levels, the market continues to function, with the lights on, without the need for rolling blackouts.

Is the price high? Yes, exactly. But that’s exactly what should happen in times of market scarcity. High prices create a strong incentive for generators to increase supply and consumers to reduce demand.

I just wish the demand could do more. The impressive rally against amber alerts underscores the untapped potential of this market. I don’t think anyone thinks the state should get into the habit of sending emergency text messages like this all the time, but the possibility of seeing so many people acting together is shocking.

Between CAISO flex alerts and an increasing number of critical peak pricing plans and demand response companies such as Ohmic connectionthere are a lot of smart people trying to introduce More dynamic incentives for electricity consumers. It’s important that California continues to bring innovative demand flexibility to the market, because this won’t be the last heat wave, nor the last extreme price.


Follow Energy Institute blogs, research and events on Twitter @energyathaas.

Suggested Citation: Davis, Lucas. “How High Are Electric Prices in California?” Energy Institute Blog, UC Berkeley, September 12, 2022, https://energyathaas.wordpress.com/2022/09/12/how-high-did-californias- electricity-prices-get/

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