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Power Prices Rise on Heels of an Algonquin Basis Increase
November 18, 2013
Forward power prices in New England spiked on Thursday and Friday due to a surge in Algonquin (AGT) gas basis. Basis for December almost doubled from Wednesday to Friday, increasing by $4.50/MMBtu, and the Algonquin winter strip (November-March) increased by $2.71/MMBtu as well. Traders, worried about pipeline constraints, did not want to get caught short, and a significant amount of buying, coupled with minimal selling, pushed the market upward. Colder-than-expected winter temperatures were also responsible for the pricing uptick. Natural gas pricing affects power (electricity) pricing, so power in New England followed suit. Additionally, prices in eastern New York rose on the market reaction.