Wholesale electric prices reach new low in New England, but retail prices remain high
ISO New England, the organization that runs the region’s power grid, just delivered a bit of good news: Wholesale electricity prices dropped to their lowest level in 13 years.
You can thank a mild winter and super-low natural gas prices. Half of New England’s electricity comes from natural-gas-fired plants.
Don’t celebrate just yet. Even with the 2016 decline in wholesale prices in New England that ISO New England reported on Monday, retail prices are still way above what people pay elsewhere in the country. In Massachusetts, for example, the average residential bill in December was 55 percent higher than the national average, according to the US Energy Information Administration.
The wholesale price is just one piece of the bill, usually about a third of the total. And it’s one that has dropped over time as other parts of the bill climbed upward. New England Power Generators Association chief executive Dan Dolan offered some statistics to back this up: The wholesale portion dropped by some 20 percent during the last decade in New England while the total bill rose by about 14 percent.
Transmission and distribution charges, essentially the payments to utilities for maintaining and building the lines, represent other big parts of the bill. And then there are public policy charges from state mandates, ranging from energy efficiency to renewable power subsidies. More increases could be coming as new state-mandated procurements of hydropower and offshore wind power are factored into rates in a few years.
Low wholesale prices could put more attention on these other factors. This comes at a potentially awkward time for Eversource, which recently asked state officials for permission to raise delivery rates for its customers in Eastern and Western Massachusetts. Even with those rate hike requests pending, Eversource spokeswoman Caroline Pretyman said Eversource expects last year’s decline in wholesale prices should mean lower costs down the road for customers as the utility enters into new electricity supply agreements.
Eversource also would like electric ratepayers to help pay for a big gas pipeline project, Access Northeast, to get more cheap gas here. Pretyman said the $3 billion project remains an important way to ensure the grid’s reliability on particularly cold days, when heating customers take priority for most of the available natural gas in the region over power plants.