The northeast blizzard has forced households to crank up the heat and hibernate since Sunday. But this activity has done little to move the power markets.

The timing of the post-Christmas snow storm is keeping a lid on electricity prices. While residential consumers are using more electricity, it is being offset by the sharp drop in industrial demand typically seen this time of the year.

"Even though it is still cold, we will have less demand because certain industry just shuts down in the holidays," said Joe Hopf, president of energy resource and trade at Public Service Enterprise Group Inc. (PEG), which operates New Jersey's largest utility.

Also, a combination of fluffy snow and gale-force winds kept high-voltage transmission lines mostly clear, preventing major outages.

Demand and prices for electricity, one of the most volatile commodities, tend to peak during hot summer temperatures, with smaller spikes seen during the winter heating months. Extreme temperatures have been a boon for power generators this year in the midst of a shaky economic recovery. Unusually cold weather early in the year followed by record hot temperatures this summer in various parts of the country boosted demand and caused power prices to spike. Sunday's blizzard bookends a tempestuous year.

These conditions have been a reprieve for power generators that have seen their fortunes fall during the recession on sharply lower demand and natural gas prices. Industrial demand has started to pick up but residential and commercial consumption continue to disappoint. Prices for gas--a fuel used in generation generate that tends to drive wholesale power market--remain low thanks to vast supplies being drilled across U.S. shale reserves.

Wholesale power prices topped $147 a megawatt hour nearly two weeks ago when the cold front moved into the northeast, Hopf said. In contrast, the wholesale price was at $43.50 a megawatt hour Monday afternoon across the 13-state grid operated by PJM Interconnection LLC, which stretches from Pennsylvania to North Carolina and as far west as Ohio.

Prices seen two weeks earlier weren't just bolstered by cold weather. Problems with gas pipelines pushed spot-market gas prices to as high as $19-$20 per million British thermal units in the New York region, Hopf said. "Some of that had cleared up. It does make a difference going into the holidays even though it is still cold," he said. Those cash prices are back down in the $8-$9 range.

Across New York state, wholesale power prices for the day-ahead market recently averaged $49.39 per megawatt hours and just over $80 for New York City, according to the New York Independent System Operator. Higher prices were seen ahead of Sunday's blizzard.

Even though utilities have fired up most if not all of their power plants, there is still ample capacity available. Winter demand is eclipsed by the generation needed during the summer. For instance, New York state's consumption was at 20,2378 megawatts this afternoon, well below demand at more than 33,000 megawatts seen during the heat wave this summer.

Meanwhile, the season's first major storm has caused relatively few disruptions. Consolidated Edison Inc. (ED), which provides power to 3.2 million New Yorkers, saw a peak of 9,000 outages in the city and Westchester County where power lines are above ground, but this has been reduced to about 3,200 customers Monday afternoon. PSEG had about 800 customer outages. The Boston Globe reported that as many as 57,000 customers were without power in parts of New England during the blizzard but power was being restored.

However, "if we go into January and it stays cold like it is now, prices will stay strong enough that you will see coal and gas run," Hopf said about a potential spike in commodity prices.

-By Naureen S. Malik, Dow Jones Newswires; 212-416-4210; naureen.malik@dowjones.com
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