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Electricity Monthly Update

With Data for August 2017  |  Release Date: October 24, 2017  |  Next Release Date: November 27, 2017
Re-release date: October 25, 2017   |   Revision

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Regional Wholesale Markets: August 2017

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

Wholesale electricity prices in August directly reflected the temperatures experienced in each region. Much of the West spent the month stuck under a high pressure ridge that brought extreme heat to the region and broke numerous high temperature records. California, Oregon, and Washington recorded their hottest Augusts’ (by average temperature) on record. Wholesale electricity prices in Northern and Southern California (CAISO), the Northwest (Mid-C), and the Southwest (Palo Verde) reflected this heat, with high prices for the month more than twice as expensive as any other selected trading hub and setting new 12-month high for each of the four hubs. In the Southwest (Palo Verde), prices reached $139/MWh on August 28, 2017 and topped out at $147/MWh on August 29, 2017. In California, prices exceeded $100/MWh in Southern California (CAISO, SP15) and Northern California (CAISO, NP15) on August 1, 2, 28 and 29, peaking on August 28, 2017 at $144/MWh in Southern California and $145/MWh in Northern California. Electricity prices in the rest of the country were much lower, between $17-$55/MWh during the month, as many states east of the Rockies recorded below- to much-below normal temperatures.

Wholesale natural gas prices at the Henry Hub in Louisiana, traditionally the main natural gas pricing point in the U.S. traded in a tight band between $2.75-$3.02/MMBtu during the month. Natural gas prices in the Northeast traded lower than the Henry Hub for all but two days during the month, down to $1.37/MMBtu in the Mid-Atlantic (Tetco M-3), $1.45/MMBtu in New York City (Transco Z6 NY) and $1.75/MMBtu in New England (Algonquin). Prices in the Northeast/Mid-Atlantic displayed an exaggerated seasonality, with prices lower from the spring to fall non-peak season as excess production has difficulty getting out of the region while spiking high in the winter during peak heating demand season as temperatures plunge and pipeline constraints into the region come into play. The highest wholesale natural gas prices during the month (of the selected trading hubs) occurred in Southern California (SoCal Border), reaching a new 12-month high of $4.10/MMBtu on August 30, 2017.

Electricity system daily peak demand

Electric systems selected for daily peak demand

Electricity system daily peak demand levels, though high and reflective of August summer conditions, were lower than peak demand levels reached in July in all regions except California (CAISO). This was due to below-normal temperatures in most states east of the Rockies and Hurricane Harvey’s landfall in Texas. In California, record heat in both the beginning and the end of the month lead to very high electricity demand, topping out at over 47.3 gigawatts (GW) on August 28, 2017, a new 12-month high in CAISO. In Texas, Hurricane Harvey made landfall on August 25, 2017, causing daily peak electricity demand in ERCOT to fall from 60-67 GW daily peak range in the week prior to landfall to only 41.7 GW on August 27, 2017 before rebounding steadily through the end of the month. Demand reached 43.46 GW on August 16, 2017 in Southern Company, just 0.1 GW short of its annual max set last month.

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