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WPCNR THE POWER NEWS. May 6, 2014:

The Con Edison electric bill was a pleasant surprise yesterday for most White Plains residents. The cost per kilowatt hour charged by Con Edison for electricity declined to 5.7 cents in April.

Previously the kilowatt hour charges the last 5 months were 8.1 cents in December, 19.1 cents in January, 10.1 cents in February, and 10.3 cents in March, down this month to 5.7 Cents!

Con Edison media spokesperson, Bob McGee told WPCNR the refreshing plunge was due decline in demand for electricity. He referred me to the New York State Independent Systems Operator for an explanation for the drop.

McGee noted that the Westchester residential customer in March  paid typically $59.11 for their electricity in March, and in April, $38,01, a decline of 35.7% in one month.

Ken Klapp, spokesperson for the NYISO issued a statement noting that a record increase in the demand for power in January accounted for higher prices for natural gas that is relied on heavily.

Here is Mr. Klapp’s statement on the volatility of wholesale prices which translated into the record rates in January:

“During extreme cold weather the higher demand for gas from both retail customers and power plants can drive up the market price.  The increased demand for gas, particularly in the Northeast, can also lead to constraints on the gas pipeline system, which also will increase the price and can reduce the availability of natural gas for generation plants.

A new record winter peak was set on January 7 (25,738 megawatts), eclipsing a record set in December 2004.

Month-long electricity use also set a record this January, reaching a total of 14,719 gigawatt-hours, the highest January total in the 15-year history of the NYISO.

In addition to fuel costs, the demand for electricity is another important factor in power costs, because the NYISO dispatches the least-costly power available and has to call on higher-cost generation as demand increases.

The NY price for natural gas in March was $7.84/MMBtu, down 33% from $11.64/MMBtu in February and the wholesale price for electricity through the NYISO energy markets was $109.57/MWh, lower than the $123.16/MWh price in February  

Wholesale Electric Prices

The primary driver of wholesale electricity prices is the cost of natural gas.  Since NY relies heavily on natural gas as a fuel to generate electricity, wholesale electric prices are very sensitive to the price of natural gas. Natural gas prices have been up over the past year.

This increase in the market cost of natural gas in the winter months is not unusual, and the markets experienced similar price increases in January 2011 and 2013.  In contrast, the winter of 2012 was relatively mild, which eased the demand for natural gas and prices remained low.

Because of growing gas supply, consumers have benefitted from the falling cost of natural gas and the corresponding drop in wholesale electricity prices since 2008.  In 2012, the annual average wholesale price for electricity was $45.28/MWh, the lowest in the 13-year history of New York’s competitive markets for electricity.

In the winter retail residential, commercial and industrial gas customers served by local utilities have priority on the pipeline system to meet heating and commercial needs.  In the winter, that demand competes with the growing demand for gas as a fuel for power plants. 

 Mr. McGee of Con Edison told WPCNR that higher Con Edison rates could be expected this summer, writing:

“This summer, you may see higher electric bills compared with last summer because of rising energy supply prices.

Westchester residential customers can expect an increase of 7.5%

New York City residential customers will likely see a 6% increase in summer bills.

The higher bills (this summer) are caused by a recent rise in natural gas and power prices.