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Electricity Monthly Update

With Data for September 2014  |  Release Date: Nov. 25, 2014  |  Next Release Date: Dec. 23, 2014

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Regional Wholesale Markets: September 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

In September, wholesale electricity and natural gas prices traded in a narrow band near the bottom of the twelve-month range. The highest electricity prices in the country for the month approached $68/MWh in both the Mid-Atlantic (PJM) and Northern CA (CAISO). The lowest electricity prices were found in the Midwest (MISO), at $27/MWh. New York City (NYISO) prices bottomed out at $30.95/MWh, setting a new twelve-month low for the region. In natural gas markets, the highest price in the country was $4.58/MMBtu in Northern CA (PG&E Citygate) and the lowest price was $1.62/MMBtu in the Mid-Atlantic (Tetco M-3). New twelve-month low prices were set in both the Mid-Atlantic and New York City (Transco Z6 NY).

Though prices in all regions tended to trade towards the bottom of the yearly range in September, prices in the Northeast continued to exhibit behavior different from the rest of the country. Due to the regions' proximity to large Marcellus natural gas production and a pipeline infrastructure that is still trying to catch up with the rapid production increases, Northeast natural gas prices, and by extension, electricity prices, can be volatile. During periods of low energy demand, natural gas and electricity prices can be the lowest in the country as robust natural gas supplies enter the area. During periods of high demand, however, pipelines into the region quickly reach capacity and prices spike to the highest in the country. In September, the spread between the lowest and highest natural gas and electricity prices during the month was significantly higher in New England, New York City and the Mid-Atlantic than at any other point in the country. This spread will only increase in the coming months, as energy demand and prices will spike in the Northeast at the first hint of cold weather.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Daily peak electricity system demand levels ranged widely in September, with peak loads in many regions close to both the annual minimum and maximum levels within the month. New York State (NYISO) and California (CAISO) both set new annual peaks in September and New England (ISONE), Mid-Atlantic (PJM), Midwest (MISO), Texas (ERCOT) and Tucson Electric were all fairly close to their annual peak maximum demand levels. Though not unheard of, it is uncommon to have higher peak demand days in September than in August. New England, New York, Mid-Atlantic, California and Tucson Electric all had higher peaks this September than occurred in August. Most of these high demand days occurred before September 5th, when weather in much of the country is still very much summer-like. As the month progresses and the weather more resembles fall, peak demand levels can drop precipitously as temperatures fall. This is especially evident in New England, New York State, Mid-Atlantic and California, which were all within 10% of both the annual maximum and minimum levels in September.

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