Short-Term Price Benchmark Trends
- Even though the average price benchmark declined last week by 0.84 percent to $0.0844/kWh, half of the states with deregulated electricity supply posted an increase. The greatest change was in Illinois with a week over week increase of 4.20 percent and a month over month increase of 10.63 percent.
- Although Rhode Island posted a significant weekly and monthly decline, it was primarily due to a supplier doubling its prices a few weeks ago and then adjusting them back this past week. If this is factored out of the average price benchmark for Rhode Island, there is only a very small decline.
- Looking at contract terms, 24- and 36-month contracts are most favorable in Connecticut, Delaware, District of Columbia, Illinois, Maryland, Ohio, Pennsylvania and Rhode Island. Texas, Massachusetts, New Jersey and New York have lower average price benchmarks for 12-month contracts.
Longer-Term Electricity Price Drivers
Weather forecasts for the next several weeks predict a warming trend that will further weaken demand. This will continue to put downward pressure on retail electricity prices moving into the summer.
While production of natural gas is hovering around an all time high, total US demand is declining, driven by falling residential and commercial demand.
Natural gas prices are at their lowest point in almost three years. The recent series of large storage injections is narrowing the five-year average deficit and expanding surplus. This is producing plenty of downside pressure on natural gas prices.
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.