Electric prices up in 2018

ISO-NE says increased power usage, shortage in natural gas supplies drive price spike

The average wholesale electricity price in 2018 rose over the previous year, New England’s regional grid operator reported Tuesday, an indicator that could mean higher electric bills for Connecticut next winter, according to state officials.

The preliminary total value of New England’s wholesale electric energy market in 2018 was $6 billion, up 34 percent compared to previous year’s near-record low value of $4.5 billion, according to officials with Holyoke. Mass. based ISO-NE, which runs the regional electric grid and oversees the wholesale energy auctions require for electric power procurement. The energy market value in 2017 was the second-lowest since the current wholesale markets were implemented 16 years ago, according ISO-NE.

One of the primary reasons for the dramatic spike in 2018’s average wholesale electric price was last winter’s lengthy cold spell. That created a shortage of natural gas, which many power plants around New England run on, said Joe Rosenthal, principal attorney with Connecticut Office of Consumer Counsel.

The OCC represents consumers in rate cases that come before state utility regulators.

“We’re seeing the impact of it now and could see it carry over into the start of next winter,” Rosenthal said. “It’s all weather driven.”

Rosenthal described the winter of 2018-19 as “moderately cold,” and said the increase in 2018 wholesale prices will likely be felt during the first quarter of 2020.

Natural gas-fired plants generated 49 percent of the electricity produced in New England, or 41 percent of the region’s total energy when including power imports from neighboring regions, according to ISO-NE officials. Consumer demand for electricity rose by 1.8 percent in 2018, which is another factor in the increase in wholesale power prices.

The average price of natural gas in 2018 in New England was $4.84 per million British thermal units, which is a 30 percent increase over the 2017 price. Even with that increase, the average 2018 natural gas price was the sixth-lowest since 2004.

Generation charges are an important element in a electrical customers monthly electric bills. Other factors include distribution charges, surcharges and other fees.