Monthly wholesale electricity prices and demand in New England, June 2022
Wholesale power prices averaged $71.71 per megawatt-hour (MWh)1 in the Real-Time Energy Market in June 2022, up 100% compared to the previous year. Day-Ahead Energy Market averages rose to $68.43/MWh, up 84% from June 2021.
By the numbers
|June 2022 and Percent Change from June 2021 and May 2022||June 2022||June 2021||May 2022|
|Average Real-Time Electricity Price ($/megawatt-hour)||$71.71||100.2%||-4.1%|
|Average Natural Gas Price ($/MMBtu)||$7.22||156.9%||-7.1%|
|Peak Demand||19,960 MW||-22.6%||5.7%|
|Total Electricity Use||9,507 GWh||-11.3%||6.3%|
|Weather-Normalized Use2||9,828 GWh||0.1%||18.6%|
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 53% of the power produced in 2021 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 $7.22 per million British thermal units (MMBtu)3. The price was up 157% from the June 2021 average Massachusetts natural gas index price of $2.81/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.
June wholesale electricity and natural gas prices
Demand is driven primarily by weather, as well as economic factors. Energy use during June decreased 11.3%, to 9,507 GWh, from the 10,722 GWh used in June 2021. The average temperature during June was 67˚ Fahrenheit (F) in New England—down 5˚ from June 2021, when temperatures were above normal and a heat wave late in the month set record highs in some cities. The average dewpoint, a measure of humidity, was 54˚F in June 2022, down 4˚ from the previous June. There were 22 cooling degree days4 (CDD) during June, while the normal number of CDD in June is 48 in New England. In June 2021, there were 107 CDD. There were 31 heating degree days (HDD) during June, while the normal number of HDD in June is 49 in New England. In June 2021, there were 11 HDD.
Consumer demand for electricity for the month peaked on June 26 during the hour from 5 to 6 p.m., when the temperature in New England was 88°F and the dewpoint was 63°. Demand reached 19,960 MW. The June 2022 peak was 22.6% lower than the June 2021 peak of 25,801 MW, set during the hour from 3 to 4 p.m. on June 29, when the temperature was 94°F and the dewpoint was 68°.
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.
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 82% of the 8,578 GWh of electric energy generated within New England during June, at about 55% and 27%, respectively. Renewable resources generated about 13% of the energy produced within New England, including 5.1% from wood, refuse, and landfill gas; 2.8% from wind; and 4.7% from solar resources. Hydroelectric resources generated 5.5%. Coal- and oil-fired resources produced less than one-tenth of one percent. The region also received net imports of about 1,069 GWh of electricity from neighboring regions.
June generation in New England, by fuel source*
The mix of resources used to produce the region’s electricity is a key driver of CO2 emissions. The ISO estimates these emissions through an analysis that blends data on electricity generation by fuel type with an emissions factor for each fuel that is based on data from the Environmental Protection Agency.
June estimated CO2 emissions in New England, by fuel source (metric tons)
New England power plants produced an estimated 2.52 million metric tons of CO2 in June 2022, down 15% from 2.96 million metric tons in June 2021.
Estimated CO2 emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—decreased 15% year over year, from 2.2 million metric tons to 1.9 million metric tons, and accounted for 75% of the region’s estimated emissions. The decrease reflected the year-over-year decline in electricity demand.
Oil- and coal-fired resources produced an estimated 7,633 metric tons of CO2, an 86% decrease from the June 2021 estimate of 54,328 metric tons. These resources accounted for about 0.3% of the region’s total estimated CO2 emissions.
CO2 emissions from other resources—mostly refuse and wood—were estimated at 615,584 metric tons in June 2022, down 6% from 655,777 metric tons last year. These resources accounted for 24% of the region’s estimated CO2 emissions in June 2022.
1One 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 1,000 homes for one hour. One gigawatt-hour (GWh) can serve about 1 million homes for one hour.
2Weather-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.
3A 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.
4A 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.
Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE.