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Monthly wholesale electricity prices and demand in New England, September 2017

The average wholesale electricity price dropped on record-low September demand and very low natural gas prices

September brought the third-lowest monthly average price for natural gas in 14 years, and the lowest energy usage during any September in New England since 2000. The result was a lower average wholesale electricity price for the month. September’s low demand follows on August’s record for the lowest energy consumption during any August since 2000.

The average real-time price of wholesale power, at $26.31 per megawatt-hour (MWh)*, was the 16th-lowest monthly price since March 2003, when markets in their current form were launched. The September real-time price was down 3.3% from the September 2016 average price of $27.21/MWh. The average day-ahead price of $23.57/MWh was 17.6% lower than the day-ahead price during September 2016, but the real-time price drop was smaller as a result of actual system conditions, including high demand on several days with planned generator outages, that pushed prices up.

September highlights:

  • Third-lowest monthly natural gas price, per million British thermal units (MMBtu)** since 2003:
    • June 2015: $1.71
    • March 2016: $1.87
    • September 2017: $1.88
    • May 2015: $1.94
    • July 2015: $1.9
  • Lowest September power consumption since 2000, in gigawatt-hours (GWh):
    • September 2017: 9,806
    • September 2009: 9,885
    • September 2001: 10,017
    • September 2000: 10,068
    • September 2013: 10,118
    • September 2016: 10,164

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 September was $1.88/MMBtu. The September price was down 26.2% from the September 2016 average Massachusetts natural gas index price of $2.55/MMBtu. The Mass. index price is a volume-weighted average of trades at four natural gas delivery points in Massachusetts, including two Algonquin points, the Tennessee Gas Pipeline, and the Dracut Interconnect. The September average natural gas price was down 19.8% from the previous month’s price of $2.34/MMBtu during August.

Electricity Demand: Demand is driven primarily by weather as well as economic factors. Energy usage during September 2017 fell 3.5% to 9,806 gigawatt-hours (GWh) from the 10,164 GWh used in September 2016. The average temperature during September was 66˚ Fahrenheit (F) in New England, the same average temperature recorded during the previous September. The average dewpoint, a measure of humidity, was 57˚F, compared to 55˚F in September 2016. The number of cooling degree days (CDD)*** and heating degree days (HDD) came in at 51 and 60, respectively, in September, compared to 51 CDD and 68 HDD in September 2016. The normal September levels are 34 CDD and 88 HDD in New England.

Peak demand for the month was recorded at 20,946 MW on September 27 during the hour from 4 to 5 p.m., when the temperature in New England was 84°F and the dewpoint was 69°. The September 2017 peak was down 9.5% from the September 2016 peak of 23,142 MW, set during the hour from 4 to 5 p.m. on September 9, 2016, when the temperature was 90°F and the dewpoint was 65°.\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. The all-time high winter peak was 22,818 MW, recording during a cold snap in January 2004 when the temperature was -1°F and the dewpoint was -20°.

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 generation produced 86% of the 8,548 gigawatt-hours (GWh) of electric energy generated within New England during September, at about 52% and 34%, respectively. Hydroelectric resources in New England generated 5%. Renewable resources generated about 9% of the energy produced within New England, including 6% from wood, refuse, and landfill gas; 2% from wind; and 1% from solar resources. Coal units generated 0.09%, and oil-fired resources produced 0.3% of the energy generated within New England. The region also received net imports of about 1,414 GWh of electricity from neighboring regions. 

September 2017 and Percent Change from September 2016 and August 2017
September 2017
Change from September 2016
Change from August 2017
Average Real-Time 
Electricity Price 
$26.31 -3.3% +10.7%
Average Natural Gas Price 
$1.88 -26.2% -19.8%
Peak Demand
20,946 MW -9.5% -7.7%
Total Electricity Use
9,806 GWh -3.5% -11.3%
Weather-Normalized Use****
9,591 GWh -2.8% -15.2%
*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 below 65 degrees is counted as one heating degree day. 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.