March 2, 2023

Monthly wholesale electricity prices and demand in New England, January 2023

Prices down in both day-ahead, real-time markets in January

Mild weather, lower natural gas prices, and a drop in demand led to year-over-year decreases in wholesale electricity prices in January 2023.

The average price in the Real-Time Energy Market was $50.51 per megawatt-hour (MWh)¹, down 66% compared to January 2022. Day-Ahead Energy Market averages fell to $49.14/MWh, down 67% from the previous year.

By the numbers

January 2023 and Percent Change from January 2022 and December 2022	January 2023	January 2022	December 2022
Average Real-Time Electricity Price ($/megawatt-hour)	$50.51	-66.0%	-58.4%
Average Natural Gas Price ($/MMBtu)	$4.73	-76.5%	-65.9%
Peak Demand	17,294 MW	-12.5%	-3.6%
Total Electricity Use	10,232 GWh	-9.6%	-1.6%
Weather-Normalized Use²	10,949 GWh	-1.4%	4.1%

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 52% of the power produced in 2022 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 January was $4.73 per million British thermal units (MMBtu)³. The price was down 77% from the January 2022 average Massachusetts natural gas index price of $20.12/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.

January wholesale electricity and natural gas prices

Electricity demand

Demand is driven primarily by weather, as well as economic factors. Energy usage during January decreased 9.6% to 10,232 GWh from the 11,313 GWh used in January 2022. The average temperature during January was 36˚ Fahrenheit (F) in New England, up 11˚ from the previous January. The average dewpoint, a measure of humidity, was 28˚F in January, up 15˚ from the previous January. There were 904 heating degree days (HDD) during January, while the normal number of HDD in January is 1172 in New England⁴. In January 2022, there were 1246 HDD. There were no cooling degree days, which is typical for January.

Consumer demand for electricity for the month peaked on January 16 during the hour from 5 to 6 p.m., when the temperature in New England was 33°F and the dewpoint was 23°. Demand reached 17,294 MW. The January 2023 peak was 12.5% lower than the January 2022 peak of 19,756 MW, set during the hour from 5 to 6 p.m. on January 11, when the temperature was 10°F and the dewpoint was -11°.

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.

January monthly peak demand and total and weather-normalized energy use

Resource 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 77% of the 8,399 GWh of electric energy generated within New England during January, at about 48% and 29%, respectively. Renewable resources generated about 10% of the energy produced within New England, including 5.4% from wood, refuse, and landfill gas; 3.6% from wind; and 1.4% from solar resources. Hydroelectric resources generated 11.9%. Coal resources generated 0.3%, while oil-fired resources did not generate a statistically significant amount of electricity. The region also received net imports of about 2,000 GWh of electricity from neighboring regions.

January 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.

January estimated CO₂ emissions in New England, by fuel source (metric tons)

New England power plants produced an estimated 2.3 million metric tons of CO₂ in January 2023, down 32% from January 2022.

The decrease was due to lower production from oil- and coal-fired resources, which generated significant amounts of electricity in January 2022 amid colder weather, higher demand, and a spike in natural gas prices. This January, oil-fired resources produced an estimated 1,741 metric tons of CO₂—a drop of more than 880,000 metric tons from last year. These resources accounted for 0.1% of the region’s total estimated CO₂ emissions in January 2023. Estimated CO₂emissions from coal-fired resources fell by 83% to an estimated 25,905 metric tons, or about 1.15% of the region’s total.

Estimated CO₂ emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—rose 2% year over year, from 1.57 million metric tons to 1.60 million metric tons, and accounted for 71% of the region’s estimated CO₂emissions. CO₂ emissions from other resources—mostly refuse and wood—were estimated at 631,902 metric tons in January 2023, down 10% from last year. These resources accounted for 28% 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.}