2015 HAS DRIVEN SOME DRAMATIC ENERGY ISSUES to the forefront across New England with intense winter weather leading to electric price volatility, retirements announced of large power plants, and continued focus on carbon reduction across the economy. There is no question that the energy system in this region, and throughout the country, is in a time of transition.

Yet, it would likely surprise many that this year has seen New England have the lowest wholesale electricity prices and largest electricity supply investments in over a decade. At the same time, the electricity system is reliable and Massachusetts and New England have one of the cleanest power generation fleets in the entire country. Consumers are seeing the benefits of a competitive marketplace for electricity put in place by policymakers more than 15 years ago.

First, some numbers – 2015 has seen five months that rank among the lowest for wholesale electricity prices since 2003. This June saw the lowest wholesale prices for electricity and natural gas since the competitive electricity marketplace began as we know it. The average electricity prices this summer in New England were actually lower than in the Midwest, which uses much higher amounts of coal-fired generation. These prices come on the heels of some of the worst winter weather we’ve ever seen this past January and February. Short term, we saw some higher (and well-publicized) prices in those two months, but what is less well publicized is the price collapse that has been experienced the rest of the year.

Dolan Dan

Investment is also booming. Right now over 1,800 megawatts of new natural gas power plants are under construction and development with commitments to come online by June 2018. Those plants alone represent more than 5 percent of the peak demand in New England. These facilities represent billions of dollars in local investments with hundreds of construction jobs and are being developed without special state contracts or guarantees. In addition, more than 11,000 megawatts of new plants are competing to come online and replace older, retiring plants. Only the most cost-effective, efficient facilities that can meet stringent environmental requirements will be selected to run in the market.

Rounding out the picture, New England has some of the cleanest electricity supplies in the entire country. Thanks to the region being a first mover on pricing carbon dioxide emissions through the Regional Greenhouse Gas Initiative, we are well poised to easily meet the new EPA Clean Power Plan standards. In 2013, the Massachusetts power generation fleet lowered its carbon dioxide emissions below the levels called for by 2020 in the state’s aggressive Clean Energy and Climate Action Plan. Renewable resources are also being supported through open, competitive procurements.

It is clear that the competitive marketplace in New England is working, driving costs down for consumers, supporting needed new local investments, and maintaining the region’s leadership place on environmental performance. This is the fulfillment of the hoped-for goals when the electricity industry was opened to competition in the late 1990s.

Improvements can and should always be made. More can be done to ensure that electric market prices reflect the true value of the services being provided. Investments will be made to further refine environmental performance and technological innovation will continue to change the way we generate and consume electricity.

As the electricity industry evolves to accommodate the needs of consumers, it is imperative that the system maintain an open architecture system in which all can compete to drive benefits for all.

The winter months are likely to continue to be tight as new infrastructure investments are made and retiring facilities are replaced. But when one takes a step back from an individual snapshot to look across the year, tremendous values are revealed.

More than 15 years in, the region’s move to a competitive electricity market is bearing fruit. 2015 has been a remarkable year indeed.

Dan Dolan is President of the New England Power Generators Association representing 80 percent of the power generation capacity in the region.

2 replies on “New England electricity market is working as is”

  2. When it comes to the cost of electricity, the wholesale market is not the only factor. We also have the Capacity Market which is designed to pay certain generators to be available for peak demand. The Capacity Market outlook is for skyrocketing increases into the foreseeable future. The mandates for renewable energy are distorting the markets against busload generation favoring flexible power from natural gas. This distortion is forcing the early retirement of dirty coal power as intended, and the unintended early retirement of clean nuclear, both to be replace by natural gas.
    This is why we had a 37% increase a couple of winters ago, and this is why rates will continue to skyrocket, in spite of periods of low wholesale pricing.
    The fact remains that demand for electricity in the region is flat for the foreseeable future. Yet rates are increasing and will continue to increase while the grid becomes a slave to the monopolistic supply of natural gas.

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