Internal Market Monitor: Wholesale electricity prices fell in 2023

Wholesale electricity prices returned to typical levels in 2023 after elevated natural gas prices drove record highs the year before, according to the latest annual report by ISO New England’s Internal Market Monitor (IMM).

The average price in the Day-Ahead Energy Market was $36.82 per megawatt-hour (MWh), a year-over-year decrease of 57%. The average Real-Time Energy Market price decreased by 58% from 2022, to $35.79/MWh.

The IMM’s 2023 Annual Markets Report concluded the region’s wholesale electricity markets generally performed well and were competitive. New forward reserve offer price rules recently approved by the Federal Energy Regulatory Commission are expected to improve competition in the Forward Reserve Market.

Other highlights from the report include:

• The total wholesale cost of electricity in 2023 was $9.5 billion, the equivalent of $82/MWh of load served. The total cost was a 43% decrease over the $16.7 billion recorded in 2022.
• Average hourly wholesale load was 13,096 MW—the lowest level since at least 2000. Contributing factors were mild weather throughout the year and continued growth in energy efficiency programs and behind-the-meter photovoltaics.
• Electricity imports from other regions were at their lowest level since 2012, accounting for 13% of the supply mix.
• Natural gas generation continued to account for the largest share (48%) of New England’s electricity supply, representing twice as much as the second largest resource type, nuclear (20%).
• Natural gas prices—the main driver of wholesale electricity costs—averaged $3.04 per million British thermal units (MMBtu), 67% lower than the average 2022 price of $9.28/MMBtu.
• Carbon dioxide (CO₂) emissions costs imposed through state and regional programs offset some of the energy cost savings realized through lower natural gas prices. The IMM estimates costs related to CO₂ contributed about $690 million to total energy costs.
• Battery storage resources became more active in the markets in 2023, accounting for 0.2% of energy supplied.

Released each spring, the Annual Markets Report presents an assessment of each of the ISO’s wholesale electricity markets, based on market data, performance criteria, and independent studies.