The average price of wholesale electricity in New England dropped by less than 1 percent in September compared to last year, although ticked up significant from this year’s mild summer pricing.
The $36.04 per megawatt hour paid in the region in September practically was on par with the $36.26 per megawatt hour paid in September 2013. However, the pricing was a 19 percent increase over August.
The main reason for the increase from August was a 21 percent rise in the commodity cost of natural gas, which fuels the majority of New England power plants generating electricity at any given moment.
Wholesale electricity costs are driven primarily by the cost of fuel for the power plants and the demand for the electricity generated. Because of more moderate temperatures, demand in September actually dropped 9 percent from August, but the rising cost of natural gas led to an overall rise in wholesale pricing.
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.
