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Electricity Monthly Update

With Data for January 2015  |  Release Date: March 27, 2015  |  Next Release Date: April 27, 2015

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Regional Wholesale Markets: January 2015

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

January wholesale natural gas and electricity market prices were high, but not the highest in the past year. Not shown in the chart and the second tab chart above are the record-high prices that occurred last January. Peak electricity prices this January reached $124/MWh in New York City (NYISO), compared to $518/MWh last January, $110/MWh this January in New England (ISONE) compared to $438/MWh last January, $82/MWh in Mid-Atlantic (PJM) this January compared to $683/MWh last January and reached only $41/MWh in the Midwest (MISO) compared to a $306/MWh peak reached last January.

Since wholesale natural gas prices typically drive wholesale electricity prices in these markets, it is no surprise that the lower electricity prices this January are coupled with much lower natural gas prices. Peak natural gas prices this January reached just over $18/MMBtu in New York City (Transco Zone 6-NY), compared to $121/MMBtu last January, reached just over $14/MMBtu in New England (Algonquin) this January compared to $78/MMBtu last January, nearly $17/MMBtu in the Mid-Atlantic (Tetco M-3) compared to $92/MMBtu last January, and just $3.46/MMBtu in the Midwest (Chicago Citygates) compared to $33/MMBtu there last January.

These lower prices were a result of several factors. First, unlike last year, this January did not see extended, extremely cold weather blanket large parts of the U.S. and thus, there was not extended periods of extremely high energy demand across large regions of the country. Second, higher levels of liquefied natural gas deliveries into New England, increased domestic natural gas production, and incremental increases in pipeline capacity moderated natural gas prices to a degree. Lastly, winter preparedness programs implemented or augmented as a result of last winter's experience led to increased communication between operators and between natural gas and electric industry participants and lower levels of forced generator outages.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Daily peak electricity system demand highs were set in many regions on January 8, as cold weather spread across much of the country. Southern Company set an annual twelve-month maximum and reached 94% of all-time peak load levels on this day. Monthly demand peaks were also set then in New England (ISONE), the Mid-Atlantic (PJM), the Midwest (MISO), Progress Florida, and Texas (ERCOT), though none approached levels seen on the Southern Company system. Record low temperatures in cities such as Charlotte, NC, Atlanta, GA, and Dallas, TX drove up electricity demand as a higher percentage of residential heating systems in these areas are electric compared to heating systems in the Northeast and Midwest.

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