Throughout most of the United States, in contrast, monthly average prices remained lower than $75/MWh.
In the Electric Reliability Council of Texas (ERCOT) market zone, day-ahead around-the-clock wholesale electricity prices averaged $38/MWh in 2019, up 13% year-on-year. However, on August 12, 2019, electricity demand in ERCOT hit a record high of 74,666 MW, propelling up wholesale prices on August 13 and 15 to reach their $9,000/MWh cap for several hours.
The Texan grid operator has one of the lowest reserve margins of any electricity market region in the U.S., meaning it has a very small buffer of extra capacity to serve peakload demand.
Electricity prices fall elsewhere amid cheap domestic gas supply
At other key hubs – PJM, ISO-NE and ISO-NY – wholesale electricity prices were generally 15% to 30% lower on average than in 2018. Analysts noted much of this decline was the result of lower natural gas prices.
Natural gas spot prices in 2019 at Henry Hub in Louisiana averaged $2.57 per million British thermal units (MMBtu) last year, about 60 cents per MMBtu lower year-on-year and the lowest annual average price since 2016. According to U.S. government analysis , lower gas prices in 2019 supported higher consumption – particularly in the electric generation sector – and higher exports. Continued growth in domestic gas production also supported lower prices throughout the year.
In the northwestern United States, constraints on a transnational gas pipeline system resulted in higher wholesale electricity prices in the region in February, which also had implications for California’s power market. In New England, timely deliveries of LNG helped reduce price volatility on both gas and power markets in the first quarter of the year.
In the Pacific Northwest, however, unseasonably cold weather at the end of winter coupled with regional supply constraints and decreased storage inventories led to significant price spikes at the Northwest Sumas hub in March.
Most new pipelines placed in service in 2019 were located in the South Central and Northeast regions. These pipelines provide additional takeaway capacity out of the Permian and Appalachian supply basins and will serve growing demand for LNG exports, pipeline exports to Mexico, and U.S. gas-fired power generation.