November’s average price of electricity fell on continuing low natural gas prices and low demand
Eight of the 10 months with the lowest wholesale power prices in 13 years occurred in 2015 and 2016, including November 2016, with the seventh-lowest monthly price. Low natural gas prices and lower demand for electricity brought November’s average monthly power price down 7%, to $24.30 per megawatt-hour (MWh)* from the November 2015 average price of $26.12/MWh. Total energy consumption in New England in November was the lowest of any November since 2000, and the sixth-lowest consumption of any month since 2000.
November 2016 highlights:
Seventh-lowest wholesale power price per megawatt-hour since March 2003, when New England’s wholesale electricity markets in their current form were launched:
- March 2016: $17.20
- June 2015: $19.61
- June 2016: $21.24
- May 2016: $21.29
- December 2015: $21.35
- October 2016: $22.72
- November 2016: $24.30
- March 2012: $25.39
- July 2015: $25.40
- April 2012: $25.41
Lowest November energy consumption since 2000, in gigawatt-hours (GWh):
- November 2016: 9,366
- November 2015: 9,448
- November 2011: 9,749
- November 2009: 9,750
- November 2001: 9,751
Sixth-lowest monthly energy consumption since 2000 (GWh):
- April 2016: 9,020
- April 2015: 9,239
- April 2012: 9,297
- October 2016: 9,319
- April 2000: 9,352
- November 2016: 9,366
Drivers of Wholesale Electricity Prices
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 49% of the power produced in the region last year, 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 November was $2.63/million British thermal units (MMBtu)** at the Algonquin pipeline delivery point in Massachusetts. The November average natural gas price represents a 20.5% decline from the November 2015 monthly natural gas price of $3.31/MMBtu. The November 2016 natural gas price rose 16.4% from the October 2016 average price of $2.26/MMBtu.
Electricity Demand: Demand is driven primarily by weather as well as economic factors. Energy usage during November 2016 fell 0.9% to 9,366 GWh from the 9,448 GWh used in November 2015. The average temperature during November was 44˚ Fahrenheit in New England compared to the 46˚ Fahrenheit average recorded during the previous November. The average dewpoint, a measure of humidity, came in at 33˚F, compared to 35˚F in November 2015. The number of cooling degree days (CDD) and heating degree days (HDD) totaled 0 and 638, respectively, in November, compared to 0 CDD and 563 HDD in November 2015. The normal November level is 0 CDD and 683 HDD in New England.***.
Peak demand for the month was recorded at 17,441 MW on November 21 during the hour from 5 to 6 p.m., when the temperature in New England was 33°F and the dewpoint was 18°. The November 2016 peak was down 1.4% from the November 2015 peak of 17,692 MW, set during the hour from 5 to 6 p.m. on November 30, 2015, when the temperature was 35°F and the dewpoint was 23°.
Peak demand is driven by weather, which drives the use of heating and air conditioning equipment. 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°. 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 supplemental resource commitments needed to ensure system stability. Natural gas-fired and nuclear power plants produced most of the 7,720 gigawatt-hours (GWh) of electric energy generated within New England during November, at about 44% and 37%, respectively. Hydroelectric resources in New England generated 6%. Renewable resources generated about 11% of the energy produced within New England, including 7.5% from wood, refuse, and landfill gas; 2.9% from wind; and 0.5% from solar resources. Coal units generated 0.7%, and oil-fired resources produced 0.6% of the energy generated within New England. The region also received net imports of about 1,777 GWh of electricity from neighboring regions.
|November 2016 and Percent Change from November 2015 and October 2016 ||November 2016 ||Change from November 2015 ||Change from October 2016
|Average Natural Gas Price
|Total Electricity Use
* 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 one 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, while each degree of a day's mean temperature that is below 65 degrees is counted as one heating degree day. A day’s mean temperature of 90 degrees equals 25 cooling degree days, while a day's mean temperature of 45 degrees equals 20 heating 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