Dive Brief:
- New England power prices last month were significantly lower than those experienced last winter — almost half the cost, according to a report to the New England Power Pool Participants Committee filed by grid operator ISO New England.
- According to the grid operator's monthly market operations report, day-ahead and real-time locational marginal prices were approximately 46% lower during March 2015 than in March 2014.
- Following the Polar Vortex of the 2013-2014 winter, when fuel supplies were stretched thin and meeting power demand became a challenge, the ISO began offering incentives to ensure a diverse set of generators had sufficient supplies on hand.
Dive Insight:
Power prices in New England were significantly cheaper this past winter, and Platts notes that it's at least partly due to the ISO's reliability program, which worked to ensure sufficient fuel diversity and supplies on hand.
The grid operator developed a reliability program last summer in response to vulnerabilities exposed by the Polar Vortex over the previous winter. The ISO created incentives for dual-fuel resource capability and participation, offsetting the carrying costs of unused firm fuel purchased by generators, and providing compensation for demand response services.
But there were other factors as well. The report found average natural gas prices were 48% below the prior year’s average prices, while residual fuel prices were down 54% from a year ago.
Federal regulators, however, are urging the grid operator to find a market-based solution to reliability. In January, FERC told the ISO it could not continue to rely on fuel-switching incentives during cold weather.
