Regional Wholesale Markets: January 2019

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

Typical winter pricing patterns appeared in January, as wholesale electricity and natural gas prices were significantly higher in the Northeast than in any other region of the country. This is the result of natural gas pipeline constraints into this area during periods of cold weather. As local distribution companies use the firm contracts they have in place on pipelines to provide natural gas to customers for heating purposes, the amount of natural gas available to power plants becomes scarce and significantly more expensive than during other parts of the year. This results in very high wholesale prices for both natural gas and electricity. In New York City, prices reached $141/MWh for electricity (NYISO) and $14.88/MMBtu for natural gas (Transco Z6 NY). In New England, prices hit $131/MWh for electricity (ISONE) and $14.82/MMBtu for natural gas (Algonquin). And in the Mid-Atlantic, electricity prices reached $89/MWh for electricity (PJM) and $9.36/MMBtu for natural gas (Tetco M-3). These were all new 12-month high prices at those hubs. New 12-month high prices were also set in the Midwest, with electricity prices reaching $97/MWh in MISO and natural gas prices hitting $7.42/MMBtu at Chicago Citygates. Wholesale natural gas prices at the Henry Hub in Louisiana, historically the proxy pricing point in the U.S, traded between $2.72-$3.58/MMBtu during the month.

Electricity system daily peak demand

January electricity system daily peak demand levels were higher than in December in all regions of the country except for the West. In the West, one of the warmest Januarys’ on record led to low electricity demand, with California (CAISO) even setting a new 12-month low daily peak demand of 23,591 MW on January 20. This date was a trifecta of downward pressure on electricity demand: temperatures were very mild, it was a Sunday, and it was a holiday weekend. East of the Rockies, demand levels rose throughout the month but in no regions did demand levels approach all-time or even 12-month highs.