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Electricity Monthly Update

With Data for August 2018  |  Release Date: Oct. 24, 2018  |  Next Release Date: Nov. 27, 2018

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Regional Wholesale Markets: August 2018

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

Extremely hot weather continued to blanket the Western U.S. in August after setting many temperature and wholesale electricity price records in July. On August 7, wholesale electricity prices reached $277/MWh in Southern California (CAISO), $267/MWh in the Southwest (Palo Verde), a new 12-month high of $255/MWh in the Northwest (Mid-C), and $132/MWh in Northern California (CAISO). High temperatures on this day were close to 100 degrees in Los Angeles, nearly 90 degrees as far north as Seattle and well into the triple digits at points inland. Wholesale natural gas prices, probably not surprisingly, were also highest in the Western U.S. Prices reached $6.76/MMBtu in Southern California (SoCal Border), by far the highest price in the country during the month, and hit a new 12-month high of $3.49/MMBtu in Northern California (PG&E Citygate).

Besides higher natural gas prices, wholesale electricity prices in the West have been affected by lower hydropower output. As drought conditions have returned to most areas west of the Rocky Mountains, hydropower generation in the West is lower than last year and must be replaced by other sources of generation. California, in particular, has seen a 47% drop in hydropower production in the first half of 2018 compared to 2017, a situation that has continued into the fall. On very hot days, as occurred in early-August, this diminished hydropower generation is often replaced by natural gas-peaking units with high marginal operating costs.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Electricity system daily peak demand levels continued to be very high across most electricity systems in August, when hot summer weather can often lead to the highest demand days of the year. New 12-month high demand levels were recorded on August 28 in the Mid-Atlantic (PJM), where daily peak demand exceeded 150.6 GW and on August 29 in New England (ISONE), which reached 25.6 GW, and in New York State (NYISO), which reached 31.9 GW, as a late-summer heat wave blanketed the East Coast. Many high temperature records were set in the Northeast in late-August and several states in New England and the Mid-Atlantic experienced their hottest August on record as measured by average temperature.

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