Energy Market Overview
PRICING
The Base Residual Capacity Auction for the 2028/2029 capacity season began on June 30, continuing a trend of sharp increases in capacity costs. Auction results surged 933% year-over-year, jumping from $29 per MW-day in 2024/2025 to $270 per MW-day in 2025/2026. As a result, capacity costs embedded in electricity rates have risen from approximately $0.003 per kWh to nearly $0.03 per kWh.
This escalation is largely driven by two factors: rapid growth in data center demand across the PJM grid and sustained increases in summer temperatures. Notably, the 10 hottest summers on record have all occurred within the past 15 years, placing additional strain on grid capacity.
The Shapiro Collar is expected to keep this year’s auction results within a range of $175 to $325 per MW-day. However, final clearing prices in recent auctions have exceeded initial expectations, with projections for this auction approaching $340 per MW-day. There is also ongoing uncertainty about whether sufficient capacity will be secured, as last year’s auction fell slightly short of demand requirements.
On the natural gas side, exports remained steady last week at 18.3 Bcf/d, indicating continued stability in global demand.
Natural Gas Storage and Supply
Weekly EIA Natural Gas Storage Report
The weekly EIA Natural Gas Storage Outlook report tracks the volume of natural gas in underground U.S. storage, revealing weekly fluctuations and comparison against 5-year averages.
Natural Gas Pricing Snapshot
LNG Exports
Both NYMEX forward strips and LNG export levels remain near recent averages, suggesting a largely balanced market for now.
(Charts: NYMEX Natural Gas Calendar Strips and LNG Exports)
NYMEX Natural Gas Calendar Strips
The NYMEX 12-Month Strip averages the next 12 months of Henry Hub futures into one price. It’s a powerful indicator of market sentiment — allowing traders (and end users) to lock in year-long coverage at a blended rate.
Watching shifts in this strip helps gauge the broader direction of gas markets, beyond just the prompt month.
Ampica Advice:
WHAT SHOULD YOU DO?
A managed index electricity agreement offers flexibility in an increasingly volatile market. Rather than locking in all energy costs upfront, this strategy allows you to secure individual components of your rate—such as capacity or line losses—while leaving the energy portion open for future purchasing. This enables you to take advantage of favorable market conditions over time.
Because energy is not purchased at the time of contract execution, longer agreement terms can be advantageous. They provide more opportunities to analyze market trends and make informed hedging decisions, whether that means purchasing incremental blocks or locking in the full supply when pricing aligns with your goals.
However, procurement strategy is only part of the equation. As electricity markets grow more volatile, reducing overall energy consumption is just as critical as securing competitive rates. Inefficiencies in systems such as HVAC or lighting can quickly offset any gains from strategic purchasing. A balanced approach—combining smart procurement with energy efficiency improvements—remains the most effective way to manage long-term costs.
Natural Gas Production: Lower 48 States
Weather Outlook
Weather Outlook & Demand
High pressure will keep most of the central and eastern U.S. very warm to hot from July 1–5, with daytime highs commonly in the 80s to near 100 degrees and strong air conditioning demand.
Out West, conditions will be more unsettled, with periods of showers and cooler highs generally in the 60s–80s, easing demand compared to the rest of the country. Taken together, this pattern points to a national electricity demand of High to Very High over the next 7 days as heat drives cooling load across the eastern two-thirds of the U.S.
PJM Ad Hub DA & Forward Trend Analysis
JM Ad Hub DA & Forward Trend Analysis
This chart shows where current PJM AD Hub day‑ahead and forward power prices sit versus the past two years of trading, and whether today’s levels look cheap or expensive for each future period.
Big picture
- Each bar represents a 24‑month trading range for a specific month, quarter, or year in the future, with the light blue band showing the lowest and highest prices over the last 2 years.
- The dark mark inside each bar is today’s forward price, so you can instantly see if the market is currently near the top, middle, or bottom of its recent range.
What the table tells you
- The table underneath lists, for each period (Q2‑2026, Q3‑2026, 2027, 2028, 2029, 2030, etc.):
- Current price in that strip.
- The maximum and minimum prices over the last 24 months and the dates they occurred.
- The current percentile (for example, 3% means today is near the very bottom of the 2‑year range; 86% means it’s near the top).
- The actual prices at the 25th, 50th, and 75th percentiles act like “cheap / mid / rich” reference points.
How to interpret it for decisions
- Periods where the current price is low on the bar and at a low percentile suggest relatively attractive buying or hedging opportunities compared with recent history.
- Periods where the current price is high on the bar and at a high percentile indicate the market is pricing that future strip richly, so you may want to be more cautious about locking in too much volume there.
NYMEX Price Trend Analysis
This chart shows that NYMEX natural gas prices over the next several years are relatively low compared with their recent trading range, but they remain volatile and tend to spike in winter months.
What the chart is basically saying
- It is a forward curve: each bar represents what the market today thinks gas will cost in a specific future month, based on NYMEX futures trading.
- The light blue “24M trading history” band around each month shows the range in which that contract has traded over the past two years, and the black line shows today’s price within that range.
- For many future months, today’s price is near the bottom of that 2‑year range (a very low percentile in the table), indicating the market is currently pricing gas on the cheaper side compared with recent history.
Big-picture energy market takeaway
- The curve gently rises over time and bumps up in winter (late 2026, 2027, 2028), reflecting expectations of stronger heating demand in cold months and the typical seasonal risk in natural gas.
- Because today’s prices sit near recent lows for many of those future periods (single‑digit to low‑double‑digit percentiles), the market is not currently forecasting a severe supply crunch; instead, it suggests adequate supply and only moderate risk premiums built in.
- For a business buyer, the practical implication is: forward prices are historically attractive right now, especially if you want to lock in budget certainty through the next several winters rather than gamble on future spikes.
