New England experienced record-high energy costs in January amid cold weather, high gas prices and heavy reliance on oil-fired generation, according to ISO-NE.

The energy market’s value totaled about $2.7 billion in January, the highest monthly total in the region’s history, the RTO told the NEPOOL Participants Committee on Feb. 5. The monthly costs surpassed the previous monthly record of nearly $2.2 billion in January 2014.

Much of the cost was concentrated during the extended stretch of cold weather at the end of the month. Temperatures averaged about 14 degrees Fahrenheit below normal over the last nine days of the month, ISO-NE noted. Energy market costs totaled $422 million on Jan. 27 alone, up nearly 150% over the previous daily total.

The grid experienced its highest peak load of the winter on Jan. 25 at 20,221 MW, exceeding ISO-NE’s high-range forecast of 21,125 MW.

Gas prices also broke records: The maximum day-ahead gas price in Massachusetts reached about $122/MMBtu on Jan. 27, the highest maximum since ISO-NE launched its standard market design in 2003, easily exceeding the previous record of about $82/MMBtu.

ISO-NE CEO Vamsi Chadalavada praised the performance of the region’s resource fleet throughout the cold stretch while acknowledging the region is not out of the woods yet, with more cold weather forecasted for the coming weekend.

Oil-fired generation, which typically accounts for less than 1% of energy in the region on an annual basis, provided 28% of energy from Jan. 24 through Feb. 1. Gas-fired generation also accounted for about 28% of energy, followed by nuclear at 19%, imports at 11%, renewables at 9% and hydropower at 5%.

On Jan. 25, ISO-NE obtained a waiver from the Department of Energy allowing generators to operate in excess of emissions limits, intended to enable resources to provide as much power as possible throughout this event. The RTO has received an extension of this waiver until Feb. 14.

With the waiver in place, about 21 resources have exceeded some limit at some point during the event, said Stephen George, vice president of system and market operations at ISO-NE.

The region burned about 66 million gallons of oil between Jan. 24 and Feb. 1, causing significant depletion of resources’ stored fuel inventories, he said. Fuel oil inventories dropped from 43% of the region’s total storage capacity to about 20%, according to data as of Feb. 4. This has caused the region’s inventory of stored fuel oil to drop to its lowest point in the past 10 years.

Heavy snowfall across the region on Jan. 24 and 25 hindered generators’ replenishment capabilities, he noted, adding that he expects to see a significant uptick in storage levels over the next couple weeks as oil consumption declines and generators continue to replenish their tanks.

He added that oil consumption by dual-fuel generators “contributed to a high demand for demineralized water trucks which were in short supply.”

While snowfall significantly limited the output of solar resources, wind resources generally performed well, averaging about 885 MWh over the nine-day period.

Imports from neighboring regions averaged about 1,900 MWh during the period, with about 52% coming from Québec and 41% coming from New York. However, flows reversed over about a two-day period coinciding with the winter storm, with New England sending power to Québec amid tight conditions in the province. (See Hydro-Québec Halted NECEC Deliveries amid Reliability Concerns.)

George said these exports cleared in the day-ahead market and were not emergency exports.

ISO-NE also experienced by far its highest monthly costs in its new day-ahead ancillary services (DAAS) market, which the RTO launched in March. While some stakeholders had already expressed concerns about the high costs experienced in the new market, monthly per-megawatt prices roughly doubled in January relative to December levels.

The ISO-NE Internal Market Monitor estimates that DAAS costs totaled $921 million between March and January, dwarfing the RTO’s projection of $140 million in annual costs.

In response to the spike in DAAS market prices, the Monitor recommended three “targeted market design adjustments,” with the support of ISO-NE.

They include upwardly adjusting how it formulates the strike price “to better align it with the short-run marginal costs of resources providing these ancillary services”; decreasing the forecast energy requirement “to reflect the expected contribution of renewable generation”; and considering decreasing the non-performance factor in the 10- and 30-minute operating reserve requirements in the day-ahead and real-time markets.

Taken together, the changes “represent narrow but meaningful refinements” that should “enhance cost effectiveness while remaining aligned with the core objectives of the DAAS design,” the Monitor wrote.

Also at the meeting, Chadalavada signaled an openness to considering changes to the region’s Pay-for-Performance rate, emphasizing the need to strike the right balance between setting strong performance incentives for capacity resources and avoiding excessive risk premiums in future capacity auctions.

He stressed the importance of both moving with agility to address potential market issues and building consensus among stakeholders to ensure durable solutions. He said ISO-NE aims to implement the proposed DAAS changes in time for next winter.

Several stakeholders expressed support for this sentiment and applauded ISO-NE for its performance throughout the cold weather event and for being open to market changes in response to cost concerns.