Powering Strong Communities
Electricity Markets

Average Wholesale Power Prices at Most Major Trading Hubs Generally Declined in 2023

Average wholesale electricity prices at most major trading hubs in the Lower 48 states generally declined and traded within more narrow price ranges in 2023, the Energy Information Administration reported on Feb. 26, citing data from S&P Global Market Intelligence.

Prices decreased primarily because of lower natural gas pricesmild temperatures at the start of the year, reduced average electricity loads in many regional markets, and improved hydroelectric conditions in California and the Southwest, EIA said.

Monthly average prices at most U.S. trading hubs were generally lower. Prices at ISO New England, the PJM Interconnection and the Midcontinent Independent System Operator were lower during every month in 2023 compared with 2022.

By contrast, the Northwest Mid-Columbia hub saw higher prices in seven months, mostly due to continuing drought conditions that reduced the availability of hydropower, although the annual average price was lower in 2023 than in 2022.

Electricity prices were most dynamic in the Electric Reliability Council of Texas market in 2023, EIA said.

Even though prices at the ERCOT-North hub did not change on average much from 2022, prices were volatile on a seasonal and intra-day basis. A persistent heat dome sustaining high temperatures throughout ERCOT in late June and into July generated record summer demand, increasing prices.

On 12 days in late June and early July, loads in Texas increased and established new daily peak load records. Later that summer, another heat wave caused even higher demand, establishing new daily peaks and increasing prices. Some hourly, real-time prices during this period exceeded $4,000 per megawatt-hour.

Data source: S&P Global Market Intelligence


“In California, a series of atmospheric rivers increased rain and snowfall, reversing—at least temporarily—long-held drought conditions. Increased in-state hydroelectric generation and improved natural gas deliverability reduced prices at the SP15 trading hub in Southern California,” EIA said.

In the Northwest, less-than-average precipitation decreased available hydropower generation and increased electricity prices.

EIA said lower natural gas prices were the most uniform contributor to reduced wholesale electricity prices across regions in 2023.

“Price changes for natural gas have an outsized influence on electricity prices because natural gas prices tend to set the marginal price of electricity during most hours in most regional markets,” it noted.

PJM reported in its 2023 State of the Market Report for PJM covering January through September that natural gas set marginal prices 84.3% of the time in the real-time market during the first nine months of 2023.

NEW Topics