Periodically, we update you on the status of day-ahead markets around the Northeast and, particularly, in New York State.

Summer Costs

As we’ve reported here a number of times, day-ahead markets in the Northeast have been low over the past year, strikingly low, as it happens, during the summer months. Prior to 2014, markets in the Northeast generally peaked during the summer months– both in terms of demand and cost. In 2014 and 2015, this trend reversed, as we reported here in August 2014.

During these year\s, markets saw pricing peak in January and February while June, July and August day-ahead prices (and forward prices) were at historic lows. While we are not yet through the summer peak demand periods, this pricing trend appears to be continuing this summer as well.

Year-to-Date Index Costs

The NYISO publishes a monthly Market Performance report. Through May 2016, day-ahead prices are even lower than they were in 2015 for the same period.

• Day-ahead energy costs (“LBMP” as the the ISO calls it) for May is $23.31/MWh; lower than $27.96/MWh in April 2016 and lower than $32.98/MWh in May 2015.

– Day-Ahead and Real Time Load Weighted LBMPs are lower compared to April.

• May 2016 average year-to-date monthly cost of $29.85/MWh is a 51% decrease from $60.96/MWh in May 2015.

The following graph shows how day-ahead (LBMP) pricing year-to-date through May 2016 compares to 2015. While you can see that there was some volatility during 2015 (in blue), particularly in winter months, there was little volatility in 2016. We are in a period of relatively low and stable index costs.

Compare the summary statistics YTD 2016:

Daily NYISO Average Cost/MWh (Energy & Ancillary Services)
2015 Annual Average $44.10MWh
May 2015 YTD Average $60.96/MWh
May 2016 YTD Average $29.85/MWh

with the summary stats for the same period last year.

Daily NYISO Average Cost/MWh (Energy & Ancillary Services) 2015 through May 
2014 Annual Average $69.31MWh
May 2014 YTD Average $108.36/MWh
May 2015 YTD Average $60.95/MWh

Bottom line for energy buyers: You may have noticed that forward prices have been more volatile lately than they have been over the past 12 months. That same volatility is not showing up in day-ahead markets. At the same time, when we see a YTD average day-ahead price across the State that is below $30/MWh, it is prudent to consider that prices will not go to $0, and that there is plenty of room for higher index costs.