Monthly wholesale electricity prices and demand in New England, March 2018
Thursday, April 26, 2018 at 10:30AM
ISO New England in Industry News & Developments, monthly prices, wholesale prices

Natural gas and wholesale power prices fell in March

Milder weather during March tempered the demand for both natural gas and power and allowed the average monthly price for each to decline from the prices recorded during March 2017. The average monthly wholesale power price fell in both the day-ahead and real-time energy markets, down 1% to $35.38 per megawatt-hour (MWh)* in the day-ahead energy market and down nearly 6% to $32.87/MWh in the real-time market.

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 48% of the power produced in 2017 by New England’s power plants, 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 March was $3.98 per million British thermal units (MMBtu)**, down nearly 11% from the March 2017 average Massachusetts natural gas index price of $4.46/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 March average natural gas price recorded a 10% decline from the February 2018 price of $4.42/MMBtu.

Electricity demand: Demand is driven primarily by weather as well as economic factors. Energy usage during March 2018 dropped 4.8% to 9,925 gigawatt-hours (GWh) from the 10,425 GWh used in March 2017. March energy usage was the second lowest of any March since 2003; the lowest occurred in March 2016, at 9,819 GWh. The average temperature during March was 36° Fahrenheit (F) in New England, compared to 32°F recorded as the average during the previous March. The average dewpoint, a measure of humidity, was 23°F, compared to 17°F in March 2017. The number of heating degree days (HDD)*** came in at 907 in March, compared to 1,012 HDD in March 2017. The normal March level is 885 HDD in New England. There were no cooling degree days in March.

Peak demand for the month was recorded at 16,855 MW on March 7 during the hour from 5 to 6 p.m., when the temperature in New England was 33°F and the dewpoint was 31°. The March 2018 peak was 3.7% lower than the March 2017 peak of 17,502 MW, set during the hour from 7 to 8 p.m. on March 15, when the temperature was 23°F and the dewpoint was 10°.

Peak demand is driven by weather, which drives the use of heating and air conditioning equipment. The all-time high winter peak was 22,818 MW, recorded during a cold snap in January 2004 when the temperature was -1°F and the dewpoint was -20°. 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 generation produced 77% of the 8,290 gigawatt-hours (GWh) of electric energy generated within New England during March, at about 46% and 31%, respectively. Renewable resources generated about 12% of the energy produced within New England, including 7% from wood, refuse, and landfill gas; 4% from wind; and 1% from solar resources. Coal units generated 0.5%, and oil-fired resources produced 0.13% of the energy generated within New England. Hydroelectric resources in New England generated 11%. The region also received net imports of about 1,770 GWh of electricity from neighboring regions.

 


March 2018 and Percent Change from March 2017 and February 2018
March 2018
Change from March 2017
Change from February 2018
Average Real-Time 
Electricity Price 
($/megawatt-hour*)
$32.87 -5.6% -11.0%
Average Natural Gas Price 
($/MMBtu**)
$3.98 -10.6% -9.9%
Peak Demand
16,855 MW -3.7% -7.7%
Total Electricity Use
9,925 GWh -4.8% +6.2%
Weather-Normalized Use****
9,934 GWh -1.7% +2.1%
*One megawatt (MW) of electricity can serve about 750 to 1,000 average homes in New England. A megawatt-hour (MWh) of electricity can serve about 750 to 1,000 homes for one hour. One gigawatt-hour (GWh) can serve about 750,000 to 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, 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.

 




 

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