Over the past two years, we’ve observed significant fluctuations in electricity futures prices in New England, influenced by a range of factors, including:
- Weather forecasts
- Natural gas prices and storage volumes
- LNG exports
- Speculation of supply and demand
- Developments such as the Russia-Ukraine war
Calendar Year 2023: In mid-August of 2022, electricity for the calendar year 2023 was trading at 13.25 cents per kWh (energy-only). However, by the end of 2022, that same electricity could be purchased for as low as 9 cents per kWh.
Calendar Year 2024: Prices for 2024 reached a high of 10.29 cents in August of 2022 but declined throughout the year. They started 2023 at 8.85 cents/kWh but rapidly fell to 6.54 cents by January 27, representing a 2.5 cent drop in just three weeks.
Winter Volatility: The winter months of December, January, and February typically yield the most volatility in price swings. In late August of 2022, January and February of 2023 reached highs of 33 cents/kWh, significantly impacting the 2023 calendar year price. By the end of the year, January and February for 2023 had fallen to 16 and 18 cents, respectively—half the price they were trading at just four months prior. Looking ahead to January and February of 2024, they are currently trading at approximately 12 cents, contributing to a decrease in the calendar year price average.
Future Outlook: We anticipate continued price volatility going forward, influenced by a multitude of factors. While 2024 prices are not as low as they were in 2020, it is unlikely that we will return to those levels in the next few years.
Note: The electricity prices referenced here are energy-only and do not reflect a total electricity supply price that includes capacity, ancillaries, RECs, etc.
Table 1: Electricity Price Trends (2024, 2025, and 2026)
In summary, the past two years have seen significant fluctuations in electricity futures prices in New England, driven by various factors, with winter months contributing to heightened volatility. These trends provide valuable insights into the dynamics of the energy market in the region, and the outlook suggests that price stability may remain elusive in the near future.