Prices fall in auction for future electricity production in New England

Monitor Staff
Thursday, February 08, 2018

Despite concerns about bottlenecks of natural gas making it hard for New England power plants to produce enough electricity in future winters, a regional power auction looking three years down the road found no evidence of rising prices.

The sale, known as the forward capacity auction, is run by ISO-New England, which oversees the six-state power grid. It asks power plants to say how much extra money they need to be paid to guarantee that they will produce certain amounts of electricity during 2021-2022. 

The average price, announced Thursday, was $4.63 per kilowatt-month – about one-seventh lower than the price that systems demanded in the same auction last year.

This seems to indicate that the growing number of dual-fuel power plants, which can burn either natural gas or oil depending on which is cheaper, make the industry confident it can meet New England’s electricity demands during an extended polar vortex. That’s despite the looming closure of major plants including Pilgrim Station nuclear and the large Bridgeport Harbor coal-fired plant.

Other details from the auction, which was part of the wholesale market and doesn’t directly affect the retail rates on our monthly power bill:

It included 3,600 megawatts of non-power-plant resources – that is, energy efficiency that reduces demand and demand reduction, in which industrial customers guarantee to cut back their electricity use for a period when shortages are looming. That amount is equivalent to about three times the output of Seabrook Station nuclear power plant. 

The auction included 1,217 megawatts of electricity imported from New York and the Canadian provinces of Québec and New Brunswick over existing transmission lines.

Only 132 megawatts of wind and 86 megawatts of solar facilities were included, although ISO-NE noted that most photovoltaic solar in New England doesn’t participate in the wholesale market because it’s “behind the meter,” or used directly by the customer.

This capacity auction is different than the energy market, in which all power producers compete on a daily basis to sell electricity into the market.  The energy price can fluctuate wildly depending on weather and demand.

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek)