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U.S. Northeast natural gas spot prices jumped to about a five-year high on Dec. 22, 2022 as a cold snap brought below-freezing temperatures throughout the
U.S. Northeast natural gas spot prices jumped to about a five-year high on Dec. 22, 2022 as a cold snap brought below-freezing temperatures throughout the region. Algonquin city-gates natural gas prices jumped to $30/MMBtu on Dec. 22, its highest price since January 2018. Assume your company operates a power plant in this area that has a Heat Rate of 8,500. Assume at this time that power can be sold in the market at $100 per MWh. Is it profitable to run the power plant? What is the spark spread given this information? Hint: Use the Spark Spread calculation. Spark Spread ($/MWh) = Price of Power per MWh- [Price of Natural Gas per MMBtu * (Heat Rate/1,000)]
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