Monthly wholesale electricity prices and demand in New England, October 2022
Wholesale power prices averaged $52.34 per megawatt-hour (MWh)1 in the Real-Time Energy Market in October 2022, down 6% compared to the previous year. Day-Ahead Energy Market averages fell to $52.97/MWh, a decrease of 8% from October 2021.
Despite a year-over-year increase in the price of natural gas, wholesale power prices decreased due to lower consumer demand and fewer baseload generator outages.
By the numbers
|October 2022 and Percent Change from October 2021 and September 2022||October 2022||October 2021||September 2022|
|Average Real-Time Electricity Price ($/megawatt-hour)||$52.34||-6.4%||-14.7%|
|Average Natural Gas Price ($/MMBtu)||$4.96||4.4%||-27.0%|
|Peak Demand||14,677 MW||-3.6%||-17.3%|
|Total Electricity Use||8,659 GWh||-2.5%||-5.3%|
|Weather-Normalized Use2||8,738 GWh||-2.1%||-6.2%|
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 October was $4.96 per million British thermal units (MMBtu)3. The price was up 4% from the October 2021 average Massachusetts natural gas index price of $4.75/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.
Wholesale electricity and natural gas prices, 2003-2022
Demand is driven primarily by weather, as well as economic factors. Energy usage during October decreased 2.5% to 8,659 GWh from the 8,881 GWh used in October 2021. The average temperature during October was 54˚ Fahrenheit (F) in New England, down 3˚ from the previous October. The average dewpoint, a measure of humidity, was 44˚F in October, down 6˚ from the previous October. There were 0 cooling degree days4 (CDD) during October, while the normal number of CDD in October is 2 in New England. In October 2021, there were 2 CDD. There were 349 heating degree days (HDD) during October, while the normal number of HDD in October is 389 in New England. In October 2021, there were 244 HDD.
Consumer demand for electricity for the month peaked on October 26 during the hour from 6 to 7 p.m., when the temperature in New England was 65°F and the dewpoint was 63°. Demand reached 14,677 MW. The October 2022 peak was 3.6% lower than the October 2021 peak of 15,218 MW, set during the hour from 6 to 7 p.m. on October 14, when the temperature was 69°F and the dewpoint was 60°.
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.
Monthly peak demand and energy use
Fuel mix and emissions
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 81% of the 7,595 GWh of electric energy generated within New England during October, at about 48% and 33%, respectively. Renewable resources generated about 12% of the energy produced within New England, including 4.7% from wood, refuse, and landfill gas; 3.3% from wind; and 3.7% from solar resources. Hydroelectric resources generated 7.2%. The region also received net imports of about 1,210 GWh of electricity from neighboring regions. Coal- and oil-fired resources did not generate a statistically significant amount of electricity.
October generation in New England, by fuel source
The mix of resources used to produce the region’s electricity is a key driver of carbon dioxide (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.
October estimated CO2 emissions in New England, by fuel source (metric tons)
Emissions fell 23% year over year in October 2022, with New England power plants producing an estimated 1.99 million metric tons of CO2.
Estimated CO2 emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—fell 24% year over year, from 1.9 million metric tons to 1.5 million metric tons, and accounted for 74% of the region’s estimated emissions.
Oil-fired resources produced an estimated 3,638 metric tons of CO2, a year-over-year increase of 9%. These resources accounted for 0.2% of the region’s total estimated CO2 emissions in October. Coal-fired resources produced an estimated 465 metric tons of CO2, about 0.02% of the region’s total CO2 emissions and a year-over-year decrease of 1%.
CO2 emissions from other resources—mostly refuse and wood—were estimated at 514,139 metric tons in October 2022, down 22% from last year. These resources accounted for 26% of the region’s estimated CO2 emissions for the month.
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.