Internal Market Monitor’s 2022 annual report notes record prices and changing landscape

Record high energy prices defined the region’s wholesale electricity markets in 2022, 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 $86 per megawatt-hour (MWh), a year-over-year increase of 90%. The average Real-Time Energy Market price also increased by 90% from 2021, to $85/MWh.

High natural gas prices drove the price increases in the energy markets. Several factors contributed to this rise, including international events like the Russian-Ukrainian conflict and the pipeline limitations New England experiences in winter.

The region’s wholesale electricity markets performed well and were competitive in 2022, the IMM’s 2022 Annual Markets Report concluded.

Other highlights from the report include:

• The capacity, energy, and ancillary services markets performed well and exhibited competitive outcomes in 2022. The day-ahead and real-time energy prices reflected changes in underlying primary fuel prices, electricity demand, and the region’s supply mix.
• The total wholesale cost of electricity in 2022 was $16.7 billion, the equivalent of $140/MWh of load served. These were the highest costs of the last five years, and the total cost was a 49% increase over the $11.2 billion recorded in 2021.
• Natural gas generation continued to account for the largest share (52%) of electricity produced within New England, representing twice as much as the second largest fuel type (nuclear). Natural gas prices averaged $9.32 per million British thermal units (MMBtu) in 2022, up from $4.62/MMBtu in 2021.
• Capacity costs totaled $2 billion, down 10% (or $.022 billion) from 2021. These costs continued to decline as the market maintains surplus capacity over the system’s capacity requirements.
• Regional network load costs, which pay for the use of transmission facilities, reliability, and certain administrative services, were $2.8 billion, up 2% from 2021. The change was due to a slight increase in infrastructure costs, which make up the majority of the regional network load costs.
• Given their larger populations, Massachusetts and Connecticut are the largest consumers and producers of electricity within the ISO’s six-state footprint.

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.