With mild weather and low natural gas costs, the average price of wholesale electricity in New England fell 14 percent in August, according to regional grid administrator ISO New England.
The average price of $30.21 per megawatt hour was 14 percent below the August 2013 price ($35.08 per megawatt hour) and even 13 percent below the $34.91 per megawatt hour recorded in the previous month of July.
In general the price of wholesale electricity is driven by consumer demand and the price of the fuel to generate electricity. In August, the average temperature in New England was 69 degrees, compared to 70 degrees last year, meaning people were using their air conditioners less.
The average price of natural gas was $2.64 per million Btu, a 25 percent decrease from August 2013. Natural gas is the dominant fuel used to generate power in New England. Although electricity prices were low because of natural gas, the fuel also caused prices to spike earlier this year. Constraints in the pipeline to get the fuel to regional power plants this winter let to record wholesale electricity prices in January, February, and March.
The average wholesale electricity price is only one indicator of ratepayers’ total bills, but it can indicate whether the cost in those bills will trend up and down. The generation portion of a bill that makes up about half of ratepayers’ total cost is driven by wholesale prices, although how much the price fluctuates on a monthly basis depends on ratepayers’ contracts with suppliers.
