Warm temperatures this winter resulting in reduced demand contributed to lower natural gas and electricity prices from January through June of this year. In the first half of 2012, twenty-eight states reported the highest average daily temperatures in the past 118 years, and ten states reported the second-warmest temperatures during the same time frame.
Warm weather coupled with abundant supply and record production pushed natural gas prices near the lowest levels in a decade. In the first half of 2012, natural gas fell about 40-50% compared to the same period in 2011. This low price environment incentivized generators to switch from coal to natural gas fired generation, which contributed to lower wholesale electricity prices to begin the year.
On-peak index power prices fell between 24% and 39% in the first half of 2012 compared to the same period in 2011. The most significant declines in power prices occurred in the Northeast, with New England Mass Hub and New York City prices falling 39% year-over-year.
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