Governor Charlie Baker on has extended the stay-at-home advisory to May 18th, which continues to order thousands of businesses to remain closed and urges people to stay home to limit the spread of COVID-19. This time frame is similar to most other New England states, except for Rhode Island, which currently has plans to reopen on May 9th.
The stay-at-home advisory has had a significant impact on wholesale power prices, which in March were the lowest since 2003. Compared to the previous year, average prices were down 54.4% in the Real Time Energy market and 54.9% in the Day-Ahead Energy Market.
The cost of natural gas has a major impact on the decline of New England wholesale power prices, which are usually set by natural gas-fired power plants in the region. The cost of electricity is directly related to the cost of natural gas, because natural gas is used to generate a majority of the power in New England. With industrial activity being halted, demand for natural gas dropped significantly in March, causing the average natural gas index price to fall 60% from the previous year.
Demand for electricity also contributes to the price of wholesale power in New England. In March, mild weather contributed partly to lower demand, because demand is largely driven by heating and cooling — The average temperate in New England was up 5 degrees from last year, and caused usage to decline 7.4%. However, stay-at-home measures have also caused a drop in energy consumption in the United States. In March ISO New England began to see a decline in demand of approximately 3% to 5%, compared to what they would expect to see under weather conditions in the region.
Electric companies set their rates at set periods throughout the year, so if you purchase your energy through your local utility you most likely are not benefitting from of the current low wholesale market prices. The stay-at-home advisory could play a role in future pricing that is set to come out in July 2020, however there is no guarantee.
Commercial and industrial businesses in deregulated states — which include all states that comprise New England, except Vermont — are able take advantage of the current low wholesale power prices through a competitive supplier, and it is possible to select a rate that is lower than the rate being offered through the utility.
In a deregulated electricity market, generators compete to sell wholesale electricity to retail suppliers at the lowest possible rate. Suppliers purchase the energy needed to suit the demand they predict, and set the best rate for their customers who are able to secure rates through a fixed or variable price contract.
Commercial and industrial businesses are that interested in managing the cost of their energy spend through unique purchasing strategies are advised to speak to an energy professional. An energy advisor can help navigate the complex energy market and to help provide the best opportunity to save the most money over time.
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