So far this summer the wholesale electric prices spikes have remained rather mild. Price spikes have been amazingly docile this summer...
Why, because the politicians are breathing down their throats?
Wholesale electricity prices and demand in New England
Wednesday, July 15, 2015 at 2:20PM 
Wholesale power and natural gas prices set new records in June, dropping to lowest monthly levels in 12 years
Mild weather, low demand, and the lowest average natural gas price since 2003 brought June’s wholesale power price to under $20 per megawatt-hour, by far the lowest monthly price in the 12 years New England has had competitive power markets in their current form. June’s average real-time electric energy price of $19.61/MWh was nearly half the June 2014 average price of $37.92/MWh and nearly 23% lower than the previous record-low average monthly price of $25.39/MWh, recorded during March 2012.Matthew White, chief economist at ISO New England, said the explanation for such low power prices is simple. “It’s supply and demand. With June’s mild weather, demand for natural gas and electricity were both low, and the pipeline capacity was available to deliver a plentiful supply of exceptionally low-priced natural gas to generators in New England. Seasonal demand for natural gas has abated, and New England is able to access that low-cost supply because we aren’t seeing winter’s recurring pipeline constraints.
“But the swing in prices over just five months, going from the third-highest power price during February to the lowest in June, underscores the price volatility attributable to pipeline infrastructure constraints,” White added. “During February’s record cold, demand for natural gas was so high that the pipelines into New England—which haven’t expanded at the same pace as natural gas demand growth—were running at or near capacity. When natural gas demand is so high and the supply available to generators is limited, the price for natural gas delivered to New England rises dramatically—and so does the price for the electricity made from it.”
During February, the average wholesale price of power was $126.70/MWh, while the average price of natural gas was $17.27 per million British thermal units (MMBtu) **, the fourth-highest monthly level since 2003.
The US Energy Information Administration noted in its July 9, 2015, Natural Gas Weekly Update, entitled “Northeastern trading points set record low prices”, that natural gas prices at the Algonquin delivery point in Boston fell to an historic daily low of $1.19/MMBtu on June 5 before breaking that record with new daily low of 82 cents on July 2.
June highlights:
- Lowest average wholesale electric energy price since March 2003
- June 2015: $19.61 per megawatt-hour (MWh)*
- March 2012: $25.39/MWh
- April 2012: $25.41/MWh
- April 2015: $25.88/MWh
- May 2015: $26.12/MWh
- Lowest average monthly natural gas price since March 2003
- June 2015: $1.68/MMBtu
- May 2015: $1.85/MMBtu
- April 2012: $2.39/MMBtu
- May 2012: $2.63/MMBtu
- August 2014: $2.64/MMBtu
- Second-lowest energy consumption during any June since 2003
- June 2009: 9,960 gigawatt-hours (GWh)
- June 2015: 10,146 GWh
- June 2002: 10,317 GWh
- Third-lowest average June temperature since 2003
- June 2009: 63.1° Fahrenheit
- June 2003: 65.1° F
- June 2015: 65.2° F
In general, the two main drivers of wholesale electricity prices in New England are the cost of fuel used to produce electricity and consumer demand.
Power Plant Fuel: Fuel is typically one of the major input costs in producing electricity. Natural gas is the predominant fuel in New England, used to generate nearly half of the power produced in the region, and natural gas-fired power plants usually set the price of wholesale electricity in the region. As a result, average wholesale electricity prices are closely linked to natural gas prices.
The average natural gas price during June dropped to $1.68/MMBtu at the Algonquin pipeline delivery point in Massachusetts, a decline of nearly 60% from the $4.07/MMBtu natural gas average price during June a year ago. The June 2015 price was also nearly 10% lower than the May 2015 average price of $1.85/MMBtu, which briefly held the record for the lowest monthly average natural gas price in New England since 2003.
Electricity Demand: Demand is driven primarily by weather as well as economic factors. The average temperature was 65.2° Fahrenheit in New England, the third-lowest June temperature recorded region-wide since 2003, while the dewpoint, a measure of humidity, came in at 54.2°, about the same as the 54.5° in June 2014. The mild weather and the effects of energy-efficiency measures dropped energy usage to 10,146 GWh, the third-lowest level of energy consumption during any June since 2003, and about 2.5% lower than consumption during June 2014 when the average temperature was about 67.8°F. The impact of weather is reflected in heating and cooling degree days***. During June, the region saw 26.2 cooling degree days (CDD), a slight decline from the 27.5 CDD recorded during June 2014.
Peak demand for the month hit 20,895 MW on June 23 during the hour from 3 to 4 p.m., when the average temperature in New England was 84°F and the dewpoint was 69°. The June 2015 peak was down 1.7% from the June 2014 peak of 21,263 MW, set during the hour from 4 to 5 p.m. on June 30 when the temperature was 85°F and the dewpoint was 61°. The all-time peak demand in New England was 28,130 MW, recorded during an August 2006 heat wave, when the temperature was 94°F and the dewpoint was 74°. Peak demand is driven by weather, which drives the use of heating and air conditioning equipment. Air conditioning use is far more widespread than electric heating in New England, so weather tends to have a relatively greater impact on the summer peak than the winter peak.
Fuel Mix: The mix of resources used in any given time period depends on price and availability, as well as unit commitments made to ensure system stability. Natural gas-fired and nuclear power plants produced most of the 9,176 GWh of electric energy generated within New England during June, at 47% and 31%, respectively. Hydroelectric resources in New England generated 10%. Renewable resources generated 8% of the energy produced within New England, including 5.6% from wood and refuse, 1.4% from wind and 0.5% from solar resources. Coal units generated 0.05% and oil-fired resources produced 0.02% of the energy generated within New England. Dual-fuel units, which generally are capable of burning natural gas or oil and typically use the less expensive fuel, generated about 4%. The region also received net imports of about 1,124 GWh of electricity from neighboring regions.
| June 2015 and Percent Change from June 2014 and May 2015 | June 2015 | Change from June 2014 | Change from May 2015 |
|---|---|---|---|
| Average Real-Time Electricity Price ($/megawatt-hour**) | $19.61 | -48.3% | -24.9% |
| Average Natural Gas Price ($/MMBtu***) | $1.68 | -58.7% | -9.4% |
| Peak Demand | 20,895 MW | -1.7% | +7.1% |
| Total Electricity Use | 10,146 GWh | -2.46% | +4.5% |
| Weather-Normalized Use**** | 10,456 GWh | -2.7% | +9.9% |
* One megawatt (MW) of electricity can serve about 1,000 average homes in New England. A megawatt-hour (MWh) of electricity can serve about 1,000 homes for one hour. One gigawatt-hour (GWh) can serve about 1 million homes for one hour. ** A British thermal unit (Btu) is used to describe the heat value of fuels, providing a uniform standard for comparing different fuels. One million British thermal units are shown as MMBtu. *** A degree day is a measure of heating or cooling. A zero degree day occurs when no heating or cooling is required; as temperatures drop, more heating days are recorded, when temperatures rise, more cooling days are recorded. The base point for measuring degree days is 65 degrees; each degree of a day’s mean temperature that is above 65 degrees is counted as one cooling degree day. A day’s mean temperature of 90 degrees equals 25 cooling degree days. **** Weather-normalized demand indicates how much electricity would have been consumed if the weather had been the same as the average weather over the last 20 years
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