Monthly wholesale electricity prices and demand in New England, March 2020

Average real-time electricity lowest in market history

Mild weather, low fuel prices, and a drop in consumer demand for electricity due to the COVID-19 pandemic contributed to real-time wholesale power prices in March 2020 being the lowest of any month since the launch of the current market structure in March 2003.

Average prices were down 54.4% in the Real-Time Energy Market when compared to the previous year, falling to $16.82 per megawatt-hour (MWh)*. Prices were down by 54.9% in the Day-Ahead Energy Market when compared to March 2019, averaging $17.18/MWh.

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 2019 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 $1.58 per million British thermal units (MMBtu)**. The price fell 60.8% from the March 2019 average Massachusetts natural gas index price of $4.03/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.

Electricity demand: Demand is driven primarily by weather, as well as economic factors. Energy usage during March declined 7.4% to 9,151 GWh from the 9,887 GWh used in March 2019. The average temperature during March was 41˚ Fahrenheit (F) in New England, up five degrees the previous March. The average dewpoint, a measure of humidity, was 26˚F in March, up five degrees from March 2019. There were 738 heating degree days (HDD)*** during March, while the normal number of HDD in March is 882 in New England. In March 2019, there were 904 HDD.

Beginning in mid-March, ISO system operators started seeing a 3 to 5% decline in consumer demand related to social distancing measures implemented by the New England states in response to the COVID-19 pandemic.

Consumer demand for electricity for the month peaked on March 1 during the hour from 6 to 7 p.m., when the temperature in New England was 31°F and the dewpoint was 6°. Demand reached 15,862 MW. The March 2020 peak was 11.3% lower than the March 2019 peak of 17,876 MW, set during the hour from 6 to 7 p.m. on March 6, when the temperature was 20°F and the dewpoint was -2°.

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 about 73% of the 7,378 GWh of electric energy generated within New England during March, at about 39% and 34%, respectively. Renewable resources generated about 14% of the energy produced within New England, including 6.5% from wood, refuse, and landfill gas; 5.2% from wind; and 2.4% from solar resources. Coal- and oil-fired units produced a combined 3 GWh of electricit within New England in March. Hydroelectric resources generated 13%. The region also received net imports of about 1,925 GWh of electricity from neighboring regions.

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March 2020 and Percent Change from March 2019 and February 2020	March 2020	Change from March 2019	Change from February 2020
Average Real-Time  Electricity Price  ($/megawatt-hour*)	$16.82	-54.4%	-17.2%
Average Natural Gas Price  ($/MMBtu**)	$1.58	-60.8%	-30.4%
Peak Demand	15,862 MW	-11.3%	-6.5%
Total Electricity Use	9,151 GWh	-7.4%	-3.3%
Weather-Normalized Use*****	9,731 GWh	-5.4%	0%

*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. ****Since June 1, 2018, active demand-response resources have been able to participate on an hourly basis in the wholesale electricity markets. These resources reduce demand in real time.*****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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Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE