Wholesale electricity prices in New York declined by 54% over the past several months as natural gas prices fell dramatically, according to an analysis of recent price trends by the New York Independent System Operator (NYISO).
While natural gas prices declined by 45% during the period from June to November, the statewide average cost of wholesale power dropped by 54%. That decrease comes after a period of wholesale electricity price increases that were also directly related to increases in natural gas prices.
‘The recent drop in fossil fuel prices should not lull us into complacency when it comes to planning for the Empire State's energy future,’ says Steven Whitley, NYISO president and CEO. ‘Without sustained investment in efficient, non-polluting energy resources such as wind and hydropower, New York's electricity consumers will continue to see power price swings tied to volatile fossil fuel prices.
Data from prior summer seasons show a similar connection between natural gas and electricity prices. Between the summer of 2007 and the summer of 2008, wholesale power prices increased 48%, while natural gas prices rose 60%. Factoring out the increase in fuel prices over the past four summers, the average cost of wholesale electricity actually declined.
Since 2000, fuel-adjusted wholesale electricity costs have decreased at least 11% as of August 2008. This amounts to annual cost reductions of approximately $1.2 billion in today's dollars.
Even taking into account the increased cost of natural gas, the average cost of wholesale electricity for the months of June, July and August 2008 was $80.91 per MWh, an 8% decline from 2007, and the lowest of the four summer seasons examined. Summer average fuel-adjusted electricity prices for those three months were $87.81/MWh in 2007, $100.09/MWh in 2006, and $89.42/MWh in 2005.
SOURE: The New York Independent System Operator