The average price for wholesale electricity in New York State and across New England fell to record lows last year because of cheap natural gas, the grid operators said.
The New York Independent System Operator Inc. said the average price for power fell 7 percent to $45.23 a megawatt-hour in 2012 from the previous year. It was the lowest average in the 12-year history of the state’s competitive wholesale electricity market, the grid operator said in a statement today.
Wholesale power from Connecticut to Maine averaged $36.09 a megawatt-hour, down 23 percent from 2011 and the lowest level since the region’s competitive market was started in 2003, according to an ISO New England Inc. statement today.
Both grid operators attributed price declines to lower costs for natural gas at power plants and new generating capacity in the regions.
“The abundance and low price of natural gas are major factors in the current price of electricity in New York,” Stephen G. Whitley, chief executive officer of the Rensselaer, New York-based NYISO, said in the statement. “Our markets continue to function very well by sending the proper price signals to promote the development and use of the most efficient generation resources.”
Gas-fired plants and wind generation accounted for most of the 745 megawatts added to the New York grid in 2012, the NYISO said. More than 1,400 megawatts of capacity with an average age of 43 years were either permanently shut or suspended operations during the year.
The shift to more reliance on gas-fired generation also pushed power prices lower in New England. The average price for gas fell 20 percent to $4.01 per million British thermal units from $4.98 in 2011 amid higher production from the Marcellus shale in Pennsylvania, ISO New England said.
Electricity consumption on the six-state grid fell by about 0.9 percent to 128,007 gigawatt-hours in 2012 because of the “lingering effects of the economic downturn,” milder weather and an increased push toward energy efficiency, the Holyoke, Massachusetts-based operator said.
The total amount paid for electric energy in New England last year was $5.2 billion, down from $6.7 billion the previous year, the grid operator said. The value of this market rose to a high of $12.1 billion in 2008 when gas prices soared, according to the statement.