Wholesale electric prices last year plunged by more than one-third compared to 2014, continuing to produce major effects on customers’ monthly bills, utility finances and government energy policy.
Monthly peak hour average wholesale power prices last year declined 27 percent to 37 percent compared to 2014, according to figures compiled by the U.S. Energy Information Administration.
The steep decline was pushed along by lower natural gas prices, EIA said.
The cost of power produced by gas-fired units fell more sharply than coal-fired units. That, at a time when the Obama administration was tightening rules governing carbon emissions at the nation’s aging coal-fired generation plants in a bid to combat climate change.
“For 2015 as a whole, however, coal is still expected to surpass natural gas as the most prevalent fuel used for electricity generation,” the EIA report said.
Nuclear power plant output has also put a downward pressure on electricity prices, with total nuclear power plant output hitting the highest levels in five year.
For utilities, the falling wholesale power prices comes as they adjust to flat to declining demand for electricity as a result of major efforts to boost energy efficiency across the economy.
That has allowed utilities to embrace major infrastructure investments with minimal rate shock for customers, several utilities have said.
Ralph Izzo, head of PSEG in New Jersey, last spring told The Energy Times, “Customers have been largely spared the bill impact of necessary infrastructure investments because of low gas prices. In fact, they have reaped substantial savings from abundant, low-cost gas supplies while enjoying the benefits of improved reliability. PSEG combined electric and gas customer bills have declined more than 23 percent since 2008.”