PowerFacts
EPSA POWERFACT: ISO New England 2006 Annual Markets Report: Prices Down and Reliability Increases
"Markets performed efficiently while peak summer electricity demand continued to grow. Competition again worked well for consumers in New England, as prices fell far below their 2005 levels." John E. Shelk, President & CEO, Electric Power Supply Association
<center>LOWER FUEL COSTS LED TO LOWER WHOLESALE ELECTRICITY PRICES</center>
- "Electricity prices were consistent with those expected in a competitive market. After accounting for fuel prices, wholesale electric energy prices fell by 5% compared with 2005 prices. The actual average real-time electricity price at the Hub, weighted by system load, was $62.74/MWH, a decline of 21% from ... 2005." (ISO-New England 2006 Annual Markets Report, June 11, 2007, p. 8.) (emphasis added)
- "After adjusting for the price of fuels used to generate electricity, the average electric energy price in 2006 was similar to prices in previous years. This finding supports the hypothesis that the lower fuel prices contributed to the lower actual electric energy prices in 2006." (p. 40)
<center>COMPETITIVE MARKETS CONTINUED TO WORK WELL IN 2006</center>
- "Despite an overall decrease in average electricity use, peak demand increased by 4.6%, and on three occasions during a two-week summer period, electricity demand reached new levels. On August 2, 2006, the region ultimately set a new record for electricity use at 28,130 megawatts, surpassing the previous year's peak by 1,245 MW. In the face of these unprecedented system conditions, the ISO effectively managed the bulk power system, at times implementing long-standing operating procedures to balance supply and demand." (p. 1)
- "During 2006, the wholesale electricity markets in New England performed well and recovered from the extreme events of 2005.... Further, the wholesale electricity markets continued to support reliable operations throughout 2006, despite operational challenges…. In all cases, bulk system reliability was maintained throughout New England." (p. 143)
<center>HIGH GENERATOR AVAILABILITY</center>
- "High generator availability continued in 2006, which contributed to the reliable operation of the system under stressed conditions. After the introduction of markets in 1999, generator availability increased from 81% in 1999 and 2000 to 89% in 2002; it has remained at or near this level ever since." (p. 5)
<center>INCREASED DEMAND RESPONSE</center>
- "Also contributing to lower wholesale electric energy prices was an overall decline in average electricity demand throughout the year.... Greater participation in demand-response programs, increased retail prices, and the continued implementation of state-sponsored consumer outreach programs to promote energy efficiency combined to lower overall electricity use even further." (p.1)
- "During the year, the ISO's demand-response programs reduced energy consumption more than 52,612 MWh, with payments of $7.8 million.... Demand-response programs played a critical role in maintaining reliability during the August 2, 2006, peak-load day by providing almost 600 MW of load reductions during the peak hour." (p. 11)
- "The ISO continued to make substantial progress in 2006 toward the ultimate goal of establishing a complete wholesale electricity market structure that will allow full participation of demand response and encourage infrastructure investment." (p. 12)
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.