The Federal Energy Regulatory Commission (FERC) reports that peak electricity prices are down an average of 24 percent from last year, driven in part by falling fuel and capacity prices. Prices are down across all regions, led by the heavily gas-dependent ISO-New England region, which experienced a 34 percent drop in forward prices. Meanwhile, the Pacific Northwest saw a fall of just 13 compared to last year as droughts are expected to cause declining hydro generation. FERC presented a slide that shows the drop in forward electricity prices across the following hubs, shown on the Energy Information Administration’s website:
Also important to note, all energy market regions have sufficient capacity reserves. System operators pay power plants to make their capacity available throughout the year. If high reserve margins are available, these payments are likely to be low, and in turn electricity rates should be moderately lower. Nevertheless, localized shortages can take place in certain areas, which can lead to significant price increases.
