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Electricity Monthly Update

With Data for May 2014  |  Release Date: July 30, 2014  |  Next Release Date: August 25, 2014

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Regional Wholesale Markets: May 2014

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

Selected wholesale electricity pricing locations

Similar to April, daily wholesale electricity and natural gas prices traded in narrow bands towards the bottom of yearly ranges for the month of May. Electricity prices were highest in California, reaching $69/MWh in Southern CA (CAISO) and $68/MWh in Northern CA (CAISO) on May 13. As is often the case, electricity prices follow moves in natural gas prices and in May, the highest natural gas prices were found in California. Northern CA (PG&E Citygate) prices averaged $5.07/MMBtu, and were $0.25-0.45/MMBtu higher than the next highest priced point every day of the month. Southern CA (SoCal Border) was the next highest priced point and was higher than all other points except Northern CA for all but six trading days in the month.

The lowest electricity prices were found in the Northwest (Mid-C), which dipped to $19/MWh on May 24 and remained consistently lower than other pricing hubs for the majority of the month. The lower Northwest electricity prices come as no surprise since May is usually the beginning of peak hydroelectric season. One proxy for hydroelectric activity is measuring water flow at The Dalles Dam, a run-of-the-river dam on the Columbia River on the Washington/Oregon border. Flows at The Dalles Dam averaged 294 thousand cubic feet per second, up 28% from April's average flow, and reached 358 thousand cubic feet per second on May 27 (with daily data now through late July, that will most likely end up being the highest flow this year).

Possibly the most interesting wholesale price story for the month of May occurred in the Northeast. New York City (Transco Z6 NY) and Mid-Atlantic (Tetco M-3) had the lowest natural gas prices in the country for every day of the month, and by a wide margin. And beginning May 8, prices at New England (Alonguin) separated lower as well, and remained below the other pricing points for the rest of the month. This is a profound change in natural gas market dynamics.

The Northeast has long been known for having very high, and often the highest, natural gas prices in the country. But with sustained production growth in the Marcellus region, pipeline capacity has slowly increased as well, getting more and more of this production to key Northeast markets. Prices have begun to reflect this new reality, at least during non-peak demand periods when pipeline capacity is available, with Northeast natural gas prices now consistently lower than any other area in the U.S.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Coming as no surprise given typical monthly demand patterns, daily peak electricity system demand levels were higher in every region except Bonneville Power Administration in May compared to April. The highest loads occurred in the West, which has experienced warmer than normal temperatures for much of 2014. Tucson Electric had daily peak demand levels of 87% of their all-time peak on May 31, when high temperatures in Tucson reached 102 degrees, just short of the record for that day. California (CAISO) had daily peak demand levels of 83% of their all-time peak on May 15 due to extremely hot weather. High temperatures in Los Angeles set new records on May 14 (99 degrees) and May 15 (102 degrees), nearly 30 degrees higher than average. For the month of May as a whole, California had one of the top-10 warmest May's on record.

In the Northeast, New England (ISONE) and New York State (NYISO) daily peak demand levels remained below 70 percent of their all-time peaks. New England even set a new 12-month system peak low on May 25, just 46% of all-time peak. This was a result of three factors-May 25 was a Sunday during a holiday weekend (Sundays typically have lower demand) and the weather was extremely mild. Temperatures in Boston ranged from a low of 52 degrees to a high of 66 degrees, eliminating (or extremely limiting) the need for heating or cooling demand.

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