May 16, 2012 | last updated June 1, 2012 2:36 pm

Wholesale electricity prices fell 10 percent in 2011

The total cost of wholesale electricity fell 10 percent in 2011 from 2010, according to regional power grid administrator ISO New England, in its market monitor report.

The total cost of wholesale electricity includes the energy prices, capacity, reserves and other ancillary services. The wholesale price is the basis for the electric prices charged to ratepayers, although other costs such as congestion are added to the total final price. Ratepayers must also cover separate charges for transmission and distribution in their bills.

The 10 percent drop in wholesale prices was lead by the 4.5 percent reduction in natural gas prices. Power plants using natural gas typically set the cost of generation in New England, and the reduction in the commodity costs leads to reduction in wholesale electricity prices.

ISO also reported demand for electricity decreased 1.2 percent from 2010 to 2011.

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