Regional Wholesale Markets: January 2016

The United States has many regional wholesale electricity markets. Below we look at monthly and annual ranges of on-peak, daily wholesale prices at selected pricing locations and daily peak demand for selected electricity systems in the Nation. The range of daily prices and demand data is shown for the report month and for the year ending with the report month.

Prices and demand are shown for six Regional Transmission Operator (RTO) markets: ISO New England (ISO-NE), New York ISO (NYISO), PJM Interconnection (PJM), Midwest ISO (MISO), Electric Reliability Council of Texas (ERCOT), and two locations in the California ISO (CAISO). Also shown are wholesale prices at trading hubs in Louisiana (into Entergy), Southwest (Palo Verde) and Northwest (Mid-Columbia). In addition to the RTO systems, peak demand is also shown for the Southern Company, Progress Florida, Tucson Electric, and the Bonneville Power Authority (BPA). Refer to the map tabs for the locations of the electricity and natural gas pricing hubs and the electric systems for which peak demand ranges are shown.

In the second tab immediately below, we show monthly and annual ranges of on-peak, daily wholesale natural gas prices at selected pricing locations in the United States. The range of daily natural gas prices is shown for the same month and year as the electricity price range chart. Wholesale electricity prices are closely tied to wholesale natural gas prices in all but the center of the country. Therefore, one can often explain current wholesale electricity prices by looking at what is happening with natural gas prices.

Wholesale prices

Wholesale electricity and natural gas prices were much lower this January than in years' past, particularly in the Northeast. A combination of warmer-than-normal temperatures across the Northeast, additional pipeline infrastructure, and the generally well-supplied and low-priced natural gas environment led to regional prices just a fraction of what happened over the last several years. In the electricity market, peak prices for the month reached only $66/MWh in New England (ISONE), down from $110/MWh last year and $438/MWh two years ago. Peak prices in New York City (NYISO) reached only $71/MWh this year, down from $124/MWh last year and $518/MWh two years ago. In the Mid-Atlantic (PJM), peak prices reached only $46/MWh this year, down from $82/MWh and $683/MWh two years ago. Across the rest of the country, peak prices remained below $37/MWh at all other selected trading points.

The low wholesale natural gas prices this January were even more pronounced than the fall in wholesale electricity prices. Peak prices for the month reached only $7.85/MMBtu in New England (Algonquin), down from $14.37/MMBtu last year and $78/MMBtu two years ago. Peak prices in New York City (Transco Z6 NY) reached only $6.66/MMBtu this year, down from $18.11/MMBtu last year and $121/MMBtu two years ago. In the Mid-Atlantic (Tetco M-3), peak prices reached only $4.56/MMBtu this year, down from $16.70/MMBtu and $92/MMBtu two years ago. Peak prices remained below $2.85/MMBtu at the other seven selected trading points around the country, very low levels for any month much less a peak winter month which often records the highest prices and demand for the year.

Electricity system daily peak demand

Electricity system daily peak demand this January was lower than last year in all regions except California (CAISO), Progress Florida, and the Bonneville Power Administration (BPA) footprint. California loads peaked during the first week of the month (though loads were low compared to other times of the year), as cool weather and heavy precipitation blanketed the state. Progress Florida's 10,764 megawatt (MW) peak demand was 18% higher than its peak last January, though winter loads are considerably lower in this region than those occurring during summer months. In BPA, daily peak demand of 9,365 MW was just 200 MW lower than its 12-month peak.