Market Signals: Pricing, Strategy, and Weather Trends
Capacity Pricing Update
PJM’s Base Residual Auction (BRA) for the 2028/2029 capacity year concluded on July 7, with results released mid-July. Capacity costs remain a critical driver of rising electricity rates. In recent years, auction prices have surged dramatically—from approximately $29/MW-day in 2024/2025 to $270/MW-day in 2025/2026, a 933% increase.
PJM’s Base Residual Auction (BRA) for the 2028/2029 capacity year concluded on July 7, with results released mid-July. Capacity costs remain a critical driver of rising electricity rates. In recent years, auction prices have surged dramatically—from approximately $29/MW-day in 2024/2025 to $270/MW-day in 2025/2026, a 933% increase.
This escalation has translated directly into customer bills, increasing capacity costs from roughly $0.003/kWh to $0.03/kWh. Key factors behind this trend include rapid data center expansion across the PJM footprint and sustained increases in summer temperatures, with the 10 hottest summers on record all occurring within the past 15 years.
Energy Market Overview
Natural Gas Market Movement
Natural gas prices have softened in the near term due to reduced LNG export activity. With several LNG facilities undergoing maintenance, export volumes have declined to approximately 16.5 Bcf/d. As a result, prompt-month pricing has fallen below $3.00/MMBtu, with current levels around $2.92.
Natural gas prices have softened in the near term due to reduced LNG export activity. With several LNG facilities undergoing maintenance, export volumes have declined to approximately 16.5 Bcf/d. As a result, prompt-month pricing has fallen below $3.00/MMBtu, with current levels around $2.92.
Electricity Pricing Volatility
Extreme heat over the Independence Day holiday drove record demand on the PJM grid, pushing real-time electricity pricing above $120/MWh. As temperatures have moderated slightly, prices have eased into the mid-$80/MWh range. This volatility highlights the ongoing sensitivity of power markets to weather-driven demand spikes.
Extreme heat over the Independence Day holiday drove record demand on the PJM grid, pushing real-time electricity pricing above $120/MWh. As temperatures have moderated slightly, prices have eased into the mid-$80/MWh range. This volatility highlights the ongoing sensitivity of power markets to weather-driven demand spikes.
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.
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:
Strategic Considerations
A managed index electricity agreement provides flexibility in volatile markets by allowing you to lock in components of your rate—such as capacity or losses—while timing energy purchases strategically. Because energy is not purchased upfront, longer-term agreements provide more opportunity to monitor market conditions and execute hedging decisions when pricing is favorable.
At the same time, procurement strategy is only one side of the equation. Reducing overall energy consumption remains one of the most effective ways to control costs. Even the most competitive supply rate can be offset by inefficient systems, particularly outdated HVAC or lighting. A balanced approach—combining smart purchasing with efficiency improvements—delivers the strongest long-term results.
Natural Gas Production: Lower 48 States
Weather Outlook
Weather Outlook and Demand Impact
High pressure will dominate much of the U.S. in the near term, bringing above-normal temperatures with widespread highs in the upper 80s to 100s, and localized areas reaching the 110s. This sustained heat will continue to drive strong cooling demand across key regions.
The Midwest, Great Lakes, and Northeast will see some relief as passing systems bring showers, thunderstorms, and milder temperatures in the 70s and 80s, temporarily moderating demand.
Overall, national natural gas demand is expected to remain moderate to high over the next five days, with demand strengthening further as heat persists and expands.
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.
