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In 2013, the $8.8 billion wholesale electricity markets in New England operated efficiently and competitively, according to the Internal Market Monitor (IMM) of ISO New England Inc., the operator of the region's bulk power system and wholesale electricity markets. The ISO relies on two independent market monitors -- one internal and one external -- which annually review and report on market results and offer insights into the markets' efficiency and competitiveness, as well as market design and needed operational enhancements.

The IMM report concludes that, in 2013, higher wholesale power prices in the six-state region were due, in large part, to higher natural gas prices for natural gas -- the predominant fuel used to generate power in New England.

"Wholesale power market outcomes in 2013 reflected the increase in natural gas prices last year," said David LaPlante, vice president of market monitoring. "While energy prices went up, they were consistent with the cost of production, which is a key indicator that the markets were competitive and efficient."

The report notes that both the cost and reliability of New England's electricity system depend on the cost and availability of natural gas and fuel oil. Because natural gas generates the largest share of New England's power, high prices for natural gas have resulted in high wholesale electricity prices in the winter when the demand for natural gas is greatest. Likewise, the reliability of the region's electric grid is dependent on generators procuring sufficient natural gas and fuel oil to operate when needed.

Also notable is that the total value of the region's wholesale electricity markets -- including electric energy, capacity and ancillary services markets -- rose approximately 45 percent, from $6.1 billion in 2012 to $8.8 billion in 2013. Electric energy comprised $7.5 billion of the total in 2013. The average real-time price for wholesale electric energy rose 55 percent from $36.09 MWh in 2012 to $56.06 MWh in 2013.

The average price of natural gas, which set the wholesale electricity price in 69 percent of the hours in 2013, rose 76 percent last year -- from $3.95 per million British thermal units (MMBtu) in 2012 to $6.97/MMBtu in 2013.

Demand-side resources participating in the Forward Capacity Market declined 11 percent, from 1,724 MW in December 2012 to 1,535 MW in December 2013. Payments to demand resources totaled $92.2 million in 2013 – up slightly from $91.6 million paid in 2012. Electricity usage was up 1 percent in 2013 over 2012.

For more:
- see this report

Related Article:
ISO New England's natural gas reliance could compromise winter reliability