« ISO-NE receives successful SOC 1 Type 2 report | Main | As ovens heat up on Thanksgiving Day, so does electricity demand »
Wednesday
Nov292017

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

The average wholesale electricity price rose in October, while October energy use was fifth-lowest monthly total since 2000

Higher natural gas prices were a factor in driving up the monthly average price for wholesale electricity in October by 40%, to $31.71 per megawatt-hour (MWh)*, over the October 2016 price of $22.72/MWh. Another factor contributing to higher average power prices was seasonal maintenance that took thousands of megawatts of generation out of service during the month, resulting in tight system conditions at times. Spring and fall are called the “shoulder” seasons, due to lighter consumer demand for power when weather is mild. Because demand is lower, transmission equipment and power plants are often taken out of service during the shoulder months for routine maintenance and repairs so the equipment is ready and available to handle higher demand during summer and winter.The 20 months with the lowest energy usage since 2000 (in gigawatt-hours).

While energy usage is typically lower during shoulder months like October, last month stood out. Total energy consumption during October 2017 was the fifth-lowest of any month since January 2000, and the lowest during any October since 2000. October 2017 was also the warmest on record since 1895 in New England, a likely contributor to lower demand. Further, an intense storm arrived at the end of the month, resulting in New England-wide outages affecting as many as 1.3 million customers, lasting several days in some areas.

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 October was $2.76 per million British thermal units (MMBtu)**, up 25.8%  from the October 2016 average Massachusetts natural gas index price of $2.19/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 October average natural gas price was up 46.7% from the previous month’s price of $1.88/MMBtu, which was the third-lowest monthly natural gas price in 14 years.

Electricity Demand: Demand is driven primarily by weather as well as economic factors. Energy usage during October 2017 fell 1.2% to 9,246 gigawatt-hours (GWh) from the 9,356 GWh used in October 2016. The average temperature during October was 59° Fahrenheit (F) in New England, up from the 53° average temperature recorded during the previous October. The average dewpoint, a measure of humidity, was 50°F, compared to 44°F in October 2016. The number of cooling degree days (CDD)*** and heating degree days (HDD) came in at 16 and 201, respectively, in October, compared to 0 CDD and 366 HDD in October 2016. The normal October levels are 2 CDD and 399 HDD in New England.

Peak demand for the month was recorded at 17,250 MW on October 9 during the hour from 6 to 7 p.m., when the temperature in New England was 70°F and the dewpoint was 69°. The October 2017 peak was up 5.8% from the October 2016 peak of 16,298 MW, set during the hour from 6 to 7 p.m. on October 27, 2016, when the temperature was 38°F and the dewpoint was 36°.

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 84% of the 7,969 gigawatt-hours (GWh) of electric energy generated within New England during October, at about 54% and 30%, respectively. Hydroelectric resources in New England generated 5%. Renewable resources generated about 11% of the energy produced within New England, including 6% from wood, refuse, and landfill gas; 4% from wind; and 1% from solar resources. Coal units generated 0.01%, and oil-fired resources produced 0.2% of the energy generated within New England. The region also received net imports of about 1,383 GWh of electricity from neighboring regions


October 2017 and Percent Change from October 2016 and September 2017
October 2017
Change from October 2016
Change from September 2017
Average Real-Time 
Electricity Price 
($/megawatt-hour*)
$31.71 +39.6% +20.6%
Average Natural Gas Price 
($/MMBtu**)
$2.76 +25.8% +46.7%
Peak Demand
17,250 MW +5.8% -17.6%
Total Electricity Use
9,246 GWh -1.2% -5.7%
Weather-Normalized Use****
9,081 GWh -5.4% -5.3%
*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.