Electricity prices hit $3,000/MWh in NY this week. Yes, that's as insane as it sounds.

This Tuesday, something wild happened on the New York electricity grid during the brutal heat wave. As temperatures soared and air conditioners cranked across the state, real-time electricity locational marginal prices (LMP) exploded—peaking near $3,000 per megawatt hour around 6:00 PM.

That’s more than 30x the usual rate. That’s not a typo. This locational marginal price (LMP) is the price the grid operator sets in each area based on real-time supply and demand. When the grid’s stressed, LMPs go wild. And while you don’t pay LMPs directly, they shape the supply costs that show up on your bill.

So what caused it? And why does it matter if you’re just trying to keep your house cool? Let’s break it down.

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🔍 This chart shows electricity supply and fuel mix in New York. 

During the heat wave, demand surged as millions of people tried to cool down. For most of the day, solar and wind filled a noticeable chunk of that demand, especially when the sun was strongest.

But around 6:00 PM, just as temperatures were still blazing and people were getting home, those renewable sources dropped sharply. The sun went down. That gap had to be filled fast by backup sources—typically expensive, fossil-fuel-powered “peaker” plants that sit idle most of the year but cost a lot to run when called. Renewables were doing their job, until they couldn’t.  

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⚡ This chart shows the price of electricity in real time.
For most of June 24, solar, wind, and hydro power were humming along, meeting a good chunk of New York’s demand. But as the afternoon turned into evening, the sun went down. Demand stayed high. And that’s when prices blew up. The price jumped from around $100/MWh to nearly $3,000/MWh in a matter of minutes. That’s 30 to 40 times higher than usual, because the system had to scramble.

These price spikes are called LMPs, which is short for “locational marginal pricing.” That’s the price the grid operator sets in each area based on real-time supply and demand. When the grid’s stressed, LMPs go wild. And while you don’t pay LMPs directly, they shape the supply costs that show up on your bill.

Why prices spiked so hard

This was a perfect storm. Temperatures across New York surged into the 90s this week, pushing electricity demand to extreme levels. Everyone needed to stay cool, all at once.

What you’re seeing in the right-hand graph is a textbook example of volatility on the modern grid. During the day, electricity is relatively cheap. Renewables (like solar) flood the system with low-cost energy. At sunset, solar falls off fast. Wind is unpredictable. But demand is still peaking. People are getting home, turning on appliances, and blasting the AC.

That’s when the grid scrambles. It has to fire up “peaker plants””—expensive, fossil-fueled generators used only when demand outpaces supply. These cost a fortune to run, and those costs get passed onto you. 

This is becoming more common

This isn’t just a one-time blip. It’s a sign of what’s coming. As we add more demand to the grid–like AI data centers, electric vehicles, and more air conditioning as summer temperatures risey–we’re going to see more of these late-day price spikes unless we change how we manage the grid.

The problem isn’t that renewables don’t work.  In fact, without solar, daytime prices would be rising too. The problem is that we haven’t updated the rest of the system to match their rhythm.

No, you won’t see a $3,000/MWh price ($3/kWh) on your bill (even if you live in New York). But if you’re on a variable or utility default rate, you’re exposed to the aftershocks of price volatility like this. In New York, that means your supply charges will include these high prices, averaged with the cost throughout the other hours of the month. If you’re in a deregulated state, you may be able to lock in a fixed rate, and avoid these surprises altogether. And if you’re part of a smart thermostat or demand response program, your utility might reduce your usage during peak hours and give you rewards for helping the grid, but many programs still aren’t working as well as promised.

What you can do right now

• Get familiar with your supply rate ($/kWh, called “supply charges” in New York). Check if you’re on a fixed or variable electricity supply plan. If it’s variable, you're likely to pay more when prices spike.
• Look for better deals. In deregulated states, you can shop for lower, fixed rates that are guaranteed no matter what happens on the grid.
• Don’t wait until next month’s bill. These real-time spikes are invisible—until they show up weeks later on your statement.

Electrification only works if the system behind it is reliable, affordable, and smart.

This week’s price spike in New York showed what happens when we don’t manage that balance: cheap power during the day, followed by chaos at night. The good news? You don’t have to just wait for the grid to catch up. You can take back control of your power bill right now.