Winter energy prices hit 5-year low, Internal Market Monitor finds

Low natural gas prices and mild temperatures during the winter of 2023/2024 resulted in the lowest seasonal energy prices since 2020, according to the latest quarterly report from ISO New England’s Internal Market Monitor.

The Winter 2024 Quarterly Markets Report, which covers December 1, 2023, through February 29, 2024, presents an assessment of each of the region’s wholesale electricity markets, based on market data, performance criteria, and independent studies.

Key findings include:

  • The total estimated wholesale market cost of electricity for the winter was $2.07 billion, down 39% from the $3.39 billion reported for the winter of 2022/2023.
  • Energy market costs totaled $1.63 billion, 38% lower than the previous winter. Natural gas prices were down 47% year over year.
  • The season’s average real-time energy price ($44.39/MWh) was lower than the average day-ahead energy price ($48.66/MWh). The difference was mostly the result of higher-than-expected solar generation driving prices down at midday.
  • Capacity costs totaled $259 million, down 38% from $416 million the previous winter. Lower capacity clearing prices from the 14th Forward Capacity Auction (FCA 14) accounted for the drop. The winter 2024 payment rate for new and existing resources was $2.00 per kilowatt-month (kW-month), compared to $3.80/kW-month the previous winter.

The report also examines the first winter of the ISO’s two-year Inventoried Energy Program, which compensates certain resources that provide fuel security during cold periods. The IMM observed that oil inventories entering the season were 10% higher than the previous winter despite less favorable forward winter prices. The cost of the program was $79 million, about 4% of total wholesale market costs.

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