Energy Prices Fall, Innovation Surges Across RTO/ISO Markets

The case for competitive markets providing tangible economic and environmental benefits gets more compelling with each passing day. The latest data comes from the three organized markets that cover the Northeastern United States – PJM Interconnection, NYISO, and ISO-NE.

Wholesale energy prices fell 45.1 percent across the PJM Interconnection, which covers 13 states and Washington, D.C., PJM Independent Market Monitor says in the 2009 State of the Market Report. This is the lowest annual average price since 2002. In PJM’s most recent capacity auction, 7,050 megawatts (MW) of demand resource offers cleared the auction – equivalent to the capacity of six to eight base load power plants. While the news across PJM is positive, two states in particular stand out for the strength of their markets.

In Pennsylvania, more than 550,000 customers are now shopping with competitive power suppliers. In the PPL Electric Utilities’ service area, opened up to competition only three months ago, 387,000 total customers (26 percent of all total customers) are shopping for their power, and 47 percent of the entire energy load is served by alternative suppliers.

In Maryland, over 100,000 residential consumers have switched to competitive suppliers and over 40 percent of the total energy load is being served by competitive suppliers. Customers in the state have also signed up for 2,000 MW of demand response programs.

Further north, wholesale electricity prices and the annual demand for electricity in ISO-NE both fell to their lowest levels since 2003. The average price of wholesale electricity across New England fell 48 percent to $41.99 per megawatt hour (MWh). This figure is lower than the comparable mark set in 2003, the year competitive markets in their current form launched in the region. As with PJM, individual states tell an even more impressive story.

ISO-NE’s unique market characteristics are enabling clean energy solutions to thrive. Maine is now home to half the proposed wind power projects in New England. Massachusetts, which accounts for nearly half of the region’s demand, has about 650 MW of demand response resources, and will nearly double this figure by 2012. Connecticut is now the regional leader for demand resource development with 33% of total ISO-NE enrollment.

Finally, in New York State’s NYISO market, the 2009 wholesale average price was $48.63 per MWh, 49 percent below the 2008 average of $95.21 per MWh. The previous low average before this year was $49.90 per MWh, set in 2002. In addition, average electricity use dropped to 435,000 MWh per day, compared to 452,000 MWh per day in 2008. More than 2,000 MW of demand response now exist in NYISO, up tenfold since the market’s inception.

The New York market has also seen substantial growth in wind energy.  Wind resources grew from 424 MW in 2008 to 1,274 MW in 2009.  New York is now ranked eighth nationally in wind capacity, and more than 8,000 MW of additional wind projects are being developed.

These updated numbers tell a powerful story - when suppliers compete against each other to provide the best possible service at the lowest cost in order to attract and retain customers within well-structured and regulated markets, customers win. Joel Malina | March 30, 2010