ERC: Electricity Price Trends for the Week Ending September 18

Short-Term Price Benchmark* Trends

ERC’s average power price benchmark pretty much treaded water last week after climbing for the previous two weeks. No states posted a meaningful change in their benchmark price for retail power compared to the previous week. This is in the face of a four-day decline in natural gas prices. While retail power prices tend to lag price drivers, like NYMEX and wholesale power prices, we expect them to move in the same direction over the next few weeks.

Strong production led longer-term natural gas prices lower last week along with calendars ’17–’21, all reaching all-time lows on Friday. The weekend NOAA weather forecasts are still forecasting above normal temperatures (and higher cooling demand) for most of the country into the first week of October. This should result in a higher cooling demand during the forecast period. Nevertheless, the end-of-season storage number looks to be near 3.95 tcf, which would represent an all-time high storage.

Last week ERC’s power price benchmarks for longer-term contracts were more favorable than short-term (12/24 month) contracts in Washington DC, Maryland, New Jersey, Pennsylvania and Texas. This continues to support the longer-term expectation of mild weather, strong production and historically high storage levels moving forward.

ERC Avg Wkly Benchmarks 091815

Long-Term Price Benchmark Trends

Natural gas prices ended the week in a new lower technical trading range, despite the latest short-term weather forecasts, which continue to call for above normal temperatures for the remainder of September. Spot contracts are starting the trading week under pressure and are at their lowest level since the end of April 2015.

NYMEX natural gas is now trading in a technical trading range with, $2.47/mmbtu on the lower support side and $2.62/mmbtu as the new resistance area. This is the first time since April that the spot contract is trading in this new technical trading range after spending five months in higher trading ranges. With the shoulder season right around the corner, inventories at the start of the upcoming winter heating season are likely to be near the upper end of the normal operating range.


Jim Moore, PhD, is president of the Energy Research Council. ERC manages a portfolio of primary research programs and databases that evaluate energy prices, procurement practices and management strategies.

Jim has been CEO of several research companies including TDC, a subsidiary of International Thomson; Highline Financial, a Thomson-Reuters company; and Mentis Corporation, which was acquired by Gartner Group. He has also served as executive director of The Global Futures Forum, an international think tank, and as managing director of Gartner Group’s Global Financial Services practice.

*The weekly average price benchmarks are derived from a standardized database of daily matrix prices issued by many electricity suppliers. The database is updated every business day and includes prices issued from September 2013 forward. The benchmarks are derived by aggregating individual supplier prices across the General Service tariff rate classes for each electric utility, and then averaging the utility price benchmarks together for a state level benchmark. Finally, these state level benchmarks are averaged across the five business days of each week to create the weekly average price benchmarks by state. These benchmarks reflect the average prices for General Service tariff rate classes by utility and state, based on next month’s start date. As mentioned, these benchmarks are based on matrix prices for commercial customers with an annual usage of up to 1 million kWh. While they are not a valid measure of pricing for larger C&I customers, the high level of correlation between matrix and custom pricing make the benchmarks a reliable measure of how prices are trending, as well as the direction and velocity at which prices are changing week-over-week and month-over-month. This is similar to how the S&P or Dow measures the rate and direction of change in stock market prices over time.


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