By Amanda Durish Cook

ISO-NE power prices last year climbed from record lows, but they didn’t recover by much.

The RTO said Tuesday that cheap natural gas and declining regional demand left 2017 average wholesale prices at the second-lowest level on record.

In 2016, prices dropped to their lowest levels since New England’s current competitive electricity markets were established in 2003, according to ISO-NE.

Prices averaged $33.94/MWh in 2017, up 17.3% from the previous year but nearly 35% under 2004 levels. Last year’s wholesale market value of $4.5 billion was also the second-lowest on record, compared with 2016’s record low of $4.1 billion.

ISO-NE attributed the soft market to the second-lowest natural gas prices since 2003 ($3.72/MMBtu) and mild weather throughout much of the year. Gas prices averaged $3.09/MMBtu in 2016.

Gas-fired generation last year accounted for 48% of the power produced within New England and 41% of the region’s total energy mix, including imports.

The RTO said the extreme cold that arrived the last week of December constrained gas supplies and drove up prices, yielding $396 million of the month’s total electricity sales of $856 million.

But aside from December, consumer electricity demand remained light, averaging 121 GWh in 2017, down 2.7% for the year, according to preliminary numbers, ISO-NE said.

“Wholesale power prices were low in 2017 because of low fuel costs and relatively low consumer demand for power during most of the year,” ISO-NE CEO Gordon van Welie said in a release. “However, the last week of December illustrates the impact of constrained natural gas supplies on electricity prices. The challenging operating conditions also highlighted a growing need for competitive markets to more transparently signal the potential costs of inadequate fuel security, which creates the potential for significant reliability risks to the region.”

August and June of last year saw the seventh and eighth lowest monthly price averages on record, at $23.77/MWh and $23.93/MWh, respectively. ISO-NE’s nine lowest-priced months all occurred in 2015, 2016 and 2017. The RTO’s highest prices occurred in January 2014 during that winter’s “polar vortex,” when prices averaged $162.88/MWh.

The RTO also said consistently improving transmission congestion played in role in keeping 2017 prices low. ISO-NE said that about $10 billion in transmission upgrades since 2002 has dropped congestion and reliability-related costs from more than $700 million in 2006 to about $57 million in 2017.