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Electricity Monthly Update

With Data for December 2014  |  Release Date: March 4, 2015  |  Next Release Date: March 24, 2015

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Regional Wholesale Markets: December 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

The December natural gas and electricity markets were unique in that most locations set 12-month lows during the month, very abnormal for a winter month. A combination of extremely mild weather and a declining commodity price environment led to the lows. In the natural gas market (second tab), 12-month lows were set at all reported pricing points except New England and New York City. In the electricity markets, 12-month lows were set at all pricing points except Louisiana and Northwest. Even more unique is that these low prices occurred between December 23-29 and though energy demand can be lower during Holiday periods, it is unexpected to see 12-month lows set at so many locations in late December.

The highest wholesale prices for the month were found in New England, where natural gas prices at Algonquin reached $12.53/MMBtu on December 30 and electricity prices reached $81.85/MWh on December 8. To put these numbers in perspective, Algonquin natural gas prices reached $32.25/MMBtu and averaged $13.37/MMBtu last December and electricity prices in ISONE reached $206/MWh. No other natural gas hub traded above $4.66/MMBtu during the month and no other electricity hub traded above $56/MWh in the month, levels considerably lower than at other times over the prior 12-months.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Daily peak electricity system demand levels were on the lower end for a typical December, a result of warmer-than-normal weather that dominated most of the country. Daily peak demand levels at some point in the month approached 12-month lows in all regions except the Northwest (Bonneville Power Administration or BPA) and did not surpass 73% of each individual regions all-time peak except in BPA, which reached 82% of its all-time peak demand on December 31.

Peak demand days were also scattered throughout the month in different regions. Often during an individual month, a weather event will trigger peak demand on the same day, or on consecutive days as the system moves from west to east, for many regions. That was not the case this December. The peak demand day for the month occurred on December 1 in the Midwest (MISO), December 29 in Tucson Electric, December 31 in Texas (ERCOT) and the Northwest (BPA), and sometime between December 8-15 in the remaining regions.

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