The Megawatt Hour- Energy Management – Energy Information


Market Trends

Forward prices for power and gas continued their precipitous decline through the early part of the 1st Quarter 2015. During the latter part of February and early March, prices began to increase slightly.

In contrast to forward markets, index and day ahead markets were high in the latter part of the quarter due to the onset of cold weather and supply constraints in New England. (These are the same market dynamics that caused the so-called “Polar Vortex” spike last Winter. Unlike last Winter, when forward prices increased and remained high through the Summer, this year forward prices remained stable, and only index pricing spiked.)

There were some significant deals signed, but markets were not as active as they might have been given the opportune time for purchasing. Read more about market dynamics.


Power Markets: Q1 2015

Forward markets declined in Q1 2015; Index markets were volatile

Power markets dropped over 20% between Q4 2014 highs and Q1 2015 lows. In NY City, for example, there was a $14 decline in on-peak prices, from $68.34 in early November to $54.38 in early January 2015.

Index/day ahead markets did experience the volatility that occurred during Q1 2014, although it wasn’t as extreme. The volatility created an unusual market dynamic: forward prices have been lower than index prices.

As reported by the NY ISO in their monthly report:

  • Index prices for February 2015 were $114.35/MWh; higher than $59.60/MWh in January 2015 and lower than $123.19/MWh in February 2014.
  • February 2015 average year-to-date day ahead cost of $87.68/MWh is a 45% decrease from $157.93/MWh in February 2014.
  • Natural gas prices increased substantially.
    – Natural Gas (Transco Z6 NY) was $15.15/MMBtu, up 92% from $7.90/MMBtu in January.

Retail Market Implications

Q1 2015 markets were the best buying opportunity in 18 months

The first 8 weeks of the year were the best time in 18 months to buy power or gas. This trend began in late Q4 2014. This past quarter compares very favorably to the same Quarter last year, when markets were at historical highs.

The graph above shows the cost trend for the same 12 month contract from the period June 2015 through May 2016. This graph shows how the cost of that same contract period has changed over time.  The sample data presented here for New York City shows a savings of  20% ($822,000) for this group of large commercial builldings by purchasing now, instead of at the market peak.

MWh buyers who consistently purchase during identified buying opportunities lower bill volatility and have paid an average of 15-20% less than they would have paid for power if they’d stayed on default service with their utility.

About The Megawatt Hour Markets Report

Welcome to the Megawatt Hour Markets Report, our quarterly examination of New York’s energy markets. This report uses proprietary market data and pricing insights that took place during the First Quarter 2015 (January 1st through March 31st) and compares it to what happened last quarter and the same quarter last year. This information is not available anywhere else.