Energy Market Overview
Pricing Snapshot
Capacity, power, and natural gas markets all moved sharply over the past two weeks, creating both risk and opportunity for PJM‑served businesses.
Capacity auctions – costs locked in at elevated levels
PJM’s Base Residual Capacity Auction for the 2028/2029 delivery year ran June 30–July 7, with results scheduled for release after 4:00 p.m. on Tuesday, July 14. In recent years, capacity prices have spiked dramatically: clearing prices jumped from about $28.92 per MW‑day in the 2024/2025 auction to roughly $269–270 per MW‑day for 2025/2026—a roughly nine‑fold increase. For end‑users, that moved the capacity component of supply rates from around $0.003 per kWh to roughly $0.03 per kWh, turning capacity into a material driver of total electricity costs.
PJM’s Base Residual Capacity Auction for the 2028/2029 delivery year ran June 30–July 7, with results scheduled for release after 4:00 p.m. on Tuesday, July 14. In recent years, capacity prices have spiked dramatically: clearing prices jumped from about $28.92 per MW‑day in the 2024/2025 auction to roughly $269–270 per MW‑day for 2025/2026—a roughly nine‑fold increase. For end‑users, that moved the capacity component of supply rates from around $0.003 per kWh to roughly $0.03 per kWh, turning capacity into a material driver of total electricity costs.
This surge has been driven by strong load growth from data centers across the PJM footprint and warmer, more extreme summers—the 10 hottest summers on record have all occurred within the past 15 years—both of which increase peak demand and the value of reliable capacity.
Natural gas – softer on LNG maintenance
With multiple LNG export facilities in maintenance, U.S. LNG exports have eased to roughly 16.5 Bcf per day, reducing the pull on domestic supply. That softer export demand has pushed prompt‑month natural gas prices back below $3.00/MMBtu, with the front‑month contract recently trading near $2.92/MMBtu. Lower gas prices, if sustained, can help moderate power prices, but they do
not offset the structural rise in capacity costs.
PJM power – post‑heat‑wave cooling in prices
A significant heat dome over the Independence Day holiday drove record‑high demand on the PJM grid, with preliminary peak load estimates above 168,000 MW and wholesale prices spiking well above typical levels. July on‑peak pricing briefly traded over $120/MWh but has already begun to retreat into the mid‑$80/MWh range as temperatures normalize and system stress eases.
A significant heat dome over the Independence Day holiday drove record‑high demand on the PJM grid, with preliminary peak load estimates above 168,000 MW and wholesale prices spiking well above typical levels. July on‑peak pricing briefly traded over $120/MWh but has already begun to retreat into the mid‑$80/MWh range as temperatures normalize and system stress eases.
Even with this pullback, businesses are operating in a higher‑cost environment than in prior years due to a combination of capacity constraints, weather, and growing data‑center load.
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?
In this environment, how you buy power matters—and how much you use matters just as much.
Use managed index agreements to your advantage
A managed index electricity agreement gives you a flexible framework to buy energy over time rather than locking everything in on day one. Under this structure:
A managed index electricity agreement gives you a flexible framework to buy energy over time rather than locking everything in on day one. Under this structure:
- You can selectively fix key cost components—such as capacity and line losses—while leaving the energy portion indexed to the market.
- At any point, you can layer in blocks of fixed energy or fully convert the contract to a hedged rate if forward prices move to attractive levels.
- Because you are committing to the ability to buy energy over the contract term—not buying all the energy upfront—it usually makes sense to go longer on term to give yourself more time and data to make disciplined hedging decisions.
In a world of volatile capacity and weather‑driven price spikes, this structure can help you spread risk, avoid buying at the top, and respond to market signals as they emerge.
Pair smarter purchasing with lower usage
Price and procurement strategy are only half of the story. The other half is how much energy you use, and when you use it. You can secure an excellent supply rate, but inefficient HVAC systems, aging lighting, or poor controls can erase those savings by driving up kWh consumption and peak demand.
Price and procurement strategy are only half of the story. The other half is how much energy you use, and when you use it. You can secure an excellent supply rate, but inefficient HVAC systems, aging lighting, or poor controls can erase those savings by driving up kWh consumption and peak demand.
Targeted efficiency and demand‑management projects reduce the amount of energy you buy in the first place, shrinking the impact of higher capacity and energy prices on your budget.
Ampica’s capital‑free solutions are designed to sit alongside managed index strategies—cutting usage and peak load so you’re paying less for every component of your bill, from commodity to capacity.
Natural Gas Production: Lower 48 States
Weather Outlook
Most of the U.S. will remain very warm to hot this week, with daytime highs generally in the upper 80s to well into the 100s. Many major cities across the Midwest and East Coast are expected to see temperatures in the 90s, keeping cooling loads elevated.
Parts of the Southwest and Texas will run slightly cooler over the next five days as scattered showers hold highs in the 80s to low 90s, before temperatures rebound into the mid‑90s to near 100 by next weekend. Overall, national natural gas demand for power generation should remain strong over the next seven days, even with some regional relief.
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.
