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Monthly wholesale electricity prices and demand in New England, May 2018

Wholesale power prices fell in May to the 8th lowest monthly average

Mild weather and low demand for power combined with low natural gas prices to bring May’s wholesale electricity price to the eighth-lowest level in 15 years. New England’s wholesale electricity markets were launched in their current form in March 2003. Similarly, the price of natural gas was the 12th-lowest monthly average over the same period.
The average wholesale power price for the month of May 2018 dropped in both the day-ahead and real-time energy markets when compared to the previous year. The day-ahead energy price was down 12.0% to $24.04 per megawatt-hour (MWh)* and the real-time energy price fell 18.8% to $23.89/MWh.

Total energy consumption in May 2018 was the lowest seen during any May since 2000, and the fourth-lowest of any month since 2000. Energy consumption is typically low during mild weather in the spring and fall. Increasing installation of energy-efficiency measures and behind-the-meter photovoltaic (PV) arrays is also having a significant effect on consumer demand for power from the regional power grid on sunny days.

May 2018 highlights:

  • 8th-lowest wholesale power price since 2003
  • Lowest consumer power demand during any May since 2000
  • 4th-lowest consumer power demand for any month since 2000
  • 12th-lowest natural gas average price since 2003

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 May was $2.36 per million British thermal units (MMBtu)**, the 12th-lowest monthly natural gas price since March 2003. The price fell 21.8% from the May 2017 average Massachusetts natural gas index price of $3.02/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 May average natural gas price recorded a 52.7% decline from the April 2018 price of $4.99/MMBtu.

Electricity demand: Demand is driven primarily by weather as well as economic factors. Energy usage during May 2018 fell slightly, by 1.1% to 9,106 GWh from the 9,211 GWh used in May 2017. Energy usage during May 2018 was the lowest of any May since January 2000, and the fourth-lowest monthly consumption over the same period. The lowest monthly power demand occurred in April 2017, at 8,809 GWh. The average temperature during May was 62˚ Fahrenheit (F) in New England, compared to 56˚ recorded as the average during the previous May. The average dewpoint, a measure of humidity, was 49˚F, compared to 45˚F in May 2017. The number of heating degree days (HDD)*** came in at 146 in May, compared to 306 HDD in May 2017. The normal May level is 239 HDD in New England. There were eight cooling degree days (CDD) during both May 2018 and May 2017. The normal number of CDD is six.

Peak demand for the month was recorded at 17,457 MW on May 29 during the hour from 5 to 6 p.m., when the temperature in New England was 83°F and the dewpoint was 56°. The May 2018 peak was 13.8% lower than the May 2017 peak of 20,250 MW, set during the hour from 5 to 6 p.m. on May 18, 2017, when the temperature was 92°F and the dewpoint was 51°.

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 78% of the 7,953 gigawatt-hours (GWh) of electric energy generated within New England during May, at about 41% and 37%, respectively. Renewable resources generated about 11% of the energy produced within New England, including 5.5% from wood, refuse, and landfill gas; 3.4% from wind; and 1.7% from solar resources. Coal- and oil-fired units produced under 1%, combined, of the energy generated within New England. Hydroelectric resources in New England generated 11%. The region also received net imports of about 1,308 GWh of electricity from neighboring regions.

May 2018 and Percent Change from May 2017 and April 2018
May 2018
Change from May 2017
Change from April 2018
Average Real-Time 
Electricity Price 
$23.89 -18.8% -44.9%
Average Natural Gas Price 
$2.36 -21.8% -52.7%
Peak Demand
17,457 MW -13.8% +10.9%
Total Electricity Use
9,106 GWh -1.1% +1.6%
Weather-Normalized Use****
8,979 GWh -0.7% +0.7%
*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.