Dive Brief:

• The power sector's growing dependence on natural gas-fired power plants make it susceptible to price spikes and disruptions during extremely cold weather, according to Fitch Ratings.
• During recent cold weather, on-peak wholesale power prices rose to $765/MWh in the PJM Interconnection and $510/MWh in New York, Fitch said.
• Fitch expects gas-fired generation will make up 29% of PJM's installed capacity by 2016, up from 25% today. In the U.S., gas-fired generation will climb by 10% in the next two years from 2012 levels, Fitch said.

Dive Insight:

Clearly, more gas plants are being built, which is raising concerns that there may not be enough natural gas pipeline capacity to handle growing demand. “The frequency of disruptions and price spikes will likely increase in the future, particularly during periods of extreme winter weather as competing natural gas space heating demand may take precedence over natural gas as a source of fuel for electricity generation,” Fitch said.