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Jul272018

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

Wholesale power and natural gas prices rose in June

Despite low power demand during June, higher natural gas prices pushed up the average wholesale power price for the month of June 2018 in both the day-ahead and real-time energy markets when compared to the previous year. The day-ahead energy price was up 5.2% to $26.82 per megawatt-hour (MWh)* and the real-time energy price rose 8.7% to $26.02/MWh.

Total energy consumption in June 2018 was the lowest seen during any June since 2000. Increasing installation of energy-efficiency measures and behind-the-meter photovoltaic (PV) arrays are having a significant effect on consumer demand for power from the regional power grid, particularly on sunny days.

June marked the first month of the region’s new price-responsive demand (PRD) structure, which fully integrates demand-response resources into the energy markets. In June, active demand response accounted for 2 gigawatt-hours (GWh) of reduced system demand. Pay-for-performance capacity market incentives also went into effect on June 1, but there were no capacity shortage conditions to trigger incentive payments.

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 June was $2.66 per million British thermal units (MMBtu)**. The price rose 8% from the June 2017 average Massachusetts natural gas index price of $2.46/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 June average natural gas price recorded a 12.6% increase from the May 2018 price of $2.36/MMBtu.

Electricity demand: Demand is driven primarily by weather, as well as economic factors. Energy usage during June 2018 fell by 5.5% to 9,725 GWh from the 10,291 GWh used in June 2017. Energy usage during June 2018 was the lowest of any June since 2000. The average temperature during June was 67˚ Fahrenheit (F) in New England, compared to 68˚F recorded as the average during the previous June. The average dewpoint, a measure of humidity, was 55˚F in both June 2017 and June 2018. The number of heating degree days (HDD)*** came in at 53 in June, compared to 57 HDD in June 2017. The normal June level is 55 HDD in New England. There were 39 cooling degree days (CDD) during June 2018, significantly lower than the 58 CDD seen in June 2017. The normal number of CDD in June is 50.

Peak demand for the month was recorded at 21,006 MW on June 18 during the hour from 4 to 5 p.m., when the temperature in New England was 86°F and the dewpoint was 70°. The June 2018 peak was 12.4% lower than the June 2017 peak of 23,968 MW, set during the hour from 4 to 5 p.m. on June 13, 2017, when the temperature was 91°F and the dewpoint was 65°. The June 13, 2017 peak marked the highest peak load of the 2017 summer.

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 84% of the 8,268 GWh of electric energy generated within New England during June, at about 50% and 34%, respectively. Renewable resources generated about 10.7% of the energy produced within New England, including 6.3% from wood, refuse, and landfill gas; 2.7% 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 4.7%. The region also received net imports of about 1,590 GWh of electricity from neighboring regions.


June 2018 and Percent Change from June 2017 and April 2018
June 2018
Change from June 2017
Change from May 2018
Average Real-Time 
Electricity Price 
($/megawatt-hour*)
$26.02 +8.7% -8.9%
Average Natural Gas Price 
($/MMBtu**)
$2.66 +8.0% +12.6%
Peak Demand
21,006 MW -12.4% +20.3%
Total Electricity Use
9,725 GWh -5.5% +6.8%
Weather-Normalized Use****
8,947 GWh -2.0% +10.8%
*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.



Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE