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Wednesday
Dec272017

Summer 2017 markets report reviews wholesale market outcomes during June, July, and August 2017

The Summer 2017 Quarterly Markets Report prepared by the Internal Market Monitor (IMM) of ISO New England reviews wholesale energy market outcomes for the three-month period from June 1 through August 31, 2017.

The Summer 2017 Quarterly Markets Report notes that the total wholesale cost of electricity (including energy, capacity, and ancillary services) during the three-month period was $1.75 billion, up 12% compared to the market value of $1.56 billion during the summer of 2016. Higher capacity market costs, reflecting the effect of generator retirements after a period of excess supply, were the biggest driver of higher wholesale costs.

The average day-ahead wholesale energy price was $26.00 per megawatt-hour (MWh), down 13% from the average day-ahead price during summer 2016, while the real-time price was $24.78/MWh, 18% lower than the average real-time price during the previous summer. The year-over-year decline was due largely to natural gas prices that were 10% lower, averaging $2.44 per million British thermal units (MMBtu) compared to the $2.72/MMBtu average price during the previous summer. Other factors in the average real-time price decline compared to summer 2016 included tight system conditions that brought high prices on two days in 2016, resulting in a substantially higher summer 2016 average price, as well as milder weather in summer 2017 that resulted in lower loads and peak demand.

The Summer 2017 Quarterly Markets Report also includes an assessment of new fast-start pricing rules that were implemented on March 1, 2017. The report concludes that fast-start pricing is working, as intended, to allow the real-time price to better reflect the costs of fast-start units, to improve market transparency and price signals, and to reduce the reliance on uplift payments to ensure cost recovery.