New Jersey power auction seen lowering electric bills -traders
By Scott DiSavino
Jan 31 (Reuters) - New Jersey on Friday will kick off auctions to acquire billions of dollars of power that will likely lower electricity rates for millions of homes and businesses in the Garden State.
Electricity traders guessed prices would decline because wholesale power is trading near its lowest levels in about 10 years due to weak natural gas prices from record shale production.
In most markets, including the PJM power grid, which covers 13 Mid-Atlantic and Midwest states, including New Jersey, natural gas is the fuel that sets the price of electricity.
Nuclear power dominates New Jersey's electric market, typically supplying more than half of the state's generation, according to U.S. government data.
Last year, New Jersey acquired about 8,200 megawatts (MW) of power worth about $7 billion in two auctions. This year, the state is seeking about 8,700 MW.
The first auction is for fixed-price power for three years for residential and small business customers. In 2012, the state sought about 5,200 MW of fixed-price power.
The second auction is for hourly priced service for one year for larger commercial and industrial users. In 2012, the state sought about 3,000 MW for the hourly priced service.
One megawatt powers about 1,000 New Jersey homes. Continued...