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Wholesale electricity prices in New England fell by nearly 23% last year to their lowest levels since 2003, according to ISO New England Inc., operator of the region's bulk power system and wholesale electricity markets.

Preliminary figures show that year-over-year, the average price of wholesale electric energy fell 23% in 2012, from $46.68/MWh in 2011 to $36.09/MWh last year. Further, the 2012 price was almost 26% lower than the average price of $48.59/MWh set in 2003, the year that competitive markets in their current form were introduced in New England.

ISO New England says the magnitude of the price decline is illustrated in the total amount paid for electric energy, which fell by more than a billion dollars in the past year, from $6.7 billion in 2011 to approximately $5.2 billion in 2012, based on preliminary data. Just five years ago, in 2008, New England’s wholesale electric energy market value rose to a high of $12.1 billion, when natural gas prices soared to historic highs. In 2003, when wholesale markets were introduced in March, the total value of the electric energy market was $5.6 billion. Natural gas is the predominant fuel used to generate the region’s electricity, and preliminary figures show the average price for natural gas fell 20% from 2011 to 2012, to $4.01 per million British thermal units.

According to ISO New England, the lingering effects of the economic downturn, combined with increasing energy-efficiency efforts  and generally milder weather, also reduced regional electric energy consumption last year.

Overall, demand for electricity dropped slightly in New England in 2012, by about 0.9%, to 128,007 GWh. When annual variations in weather are factored out, which allows demand to be evaluated on a comparable basis from year to year, electricity consumption dropped 0.6% to 128,249 GWh in 2012, compared with the weather-normalized 128,998 GWh of electricity consumed in 2011.

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