New England Electricity Prices Near 10-Year High
The price of fuel for New England's natural gas power plants hit a 10-year high in February, pushing wholesale electricity prices to more than triple last year, according to grid administrator ISO New England.
The cold weather and high demand for natural gas for both heating and electricity – coupled with constraints in the pipelines to deliver natural gas to the region – increased the price of the commodity to $18.02 per million Btu, which is five times the average price from February 2012. This year's price was 27 percent higher than the previous record of $14.22 set during October 2005 when hurricanes Katrina and Rita disrupted the supply of natural gas from the Gulf of Mexico.
Because natural gas is the fuel of choice for 45 percent of New England's power plants, the cost of the commodity drives the price of wholesale electricity in the region.
In February, the average whole electricity price in New England was $108.25 per megawatt hour, more than triple the average price of $30.14 per megawatt hour in February 2012. This year marked the second highest wholesale electricity prices in the past 10 years.
The wholesale electricity price from ISO New England influences but does not directly impact ratepayer bills. Ratepayers enter into fixed rates with either utilities or competitive suppliers that don't fluctuate with the wholesale price. However, high wholesale prices are factored into the utility and supplier rates when they are renewed, typically on an annual basis.
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