We ask “what is going on with electric prices?”

PJM is essentially the wholesale market for electricity in ComEd. They will request bids from generators (electric generator owners) every year for the next three years. PJM issued a press release announcing the results of their most recent auction.

electric-lines

The press release shares some interesting highlights such as “increased diversity” even though they acknowledge the trend to more gas-fired generation.

However, the bigger issue is that the cost of the bids increased dramatically over the next year, rising from $27.73 in 2014 to over $136 by the end of 2015. This nearly 900% increase will be passed thru to all retail customers. We have already seen about 50% of this increase.

This projected increase does NOT appear to be directly related to the winter “vortex” of 2014. However, given the timing of PJM’s bid (just after winter) and the trend to more gas-fired generation, some link shouldn’t be dismissed. Last winter reminded energy traders, power generators, utilities, and energy marketers of the extent of their reliance on certain pipelines. The demand on these pipelines is increasing (by both gas-fired electrical generation and through population growth). Therefore, as the wholesale price increases, we will be starting at a higher price next winter. If winter or summer weather spikes, we could see even greater pricing than last winter.

Realgy offers fixed pricing to reduce the effect of seasonal weather by offering a winter or summer fixed price. This allows our customers to avoid paying a premium for a fixed price when they don’t have to. Please call your Energy Broker or see our PriceWatchTM service at http://realgyenergyservices.com/request-for-service/pricewatchtm/

 

Read the full PJM press release, “PJM Capacity Market Secures New And Diverse Resources To Meet Future Electricity Demand”.