How do suppliers base their bids?
Suppliers set their bid prices based on natural gas because in New England, gas-fired power plants are typically the most expensive units to operate and, under ISO New England rules, the highest-cost plant sets the market price that all suppliers receive for their services. Supply and demand, and weather disruptions, such as Hurricanes Katrina and Rita, threats of terrorism and other external factors, all impact the cost of fuel, which impacts the price suppliers will bid.
