Energy Market Overview
Capacity costs remain a major story in the PJM market. The Base Residual Capacity Auction for the 2028/2029 delivery year began on June 30, following a sharp rise in recent auctions. Prices surged 933% year over year, increasing from $29 per MW-day in 2024/2025 to $270 per MW-day in 2025/2026. For end users, that translates to a jump in capacity costs from roughly $0.003/kWh to $0.03/kWh.
This increase is being driven by two key factors: rapid data center expansion across the PJM grid and a sustained trend of hotter summers. Notably, the ten warmest summers on record have all occurred within the past 15 years, placing consistent strain on grid resources.
Natural gas prices have also edged higher over the past week, primarily due to increased demand from gas-fired power generation, which is supporting elevated electricity load.
In the near term, July power pricing remains elevated. Last week’s heat dome pushed PJM demand to record highs, driving prices above $120/MWh for the first part of the month. However, with milder weather expected, prices should begin to ease as July progresses.
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:
Strategic Considerations
A managed index electricity agreement provides flexibility in a volatile market. Rather than locking in all energy costs upfront, this strategy allows you to secure specific components of your rate—such as capacity or line losses—while purchasing energy in blocks over time.
A managed index electricity agreement provides flexibility in a volatile market. Rather than locking in all energy costs upfront, this strategy allows you to secure specific components of your rate—such as capacity or line losses—while purchasing energy in blocks over time.
Because energy is not purchased at the time of contract signing, longer-term agreements can offer a strategic advantage. They provide more opportunities to monitor market conditions and execute hedging decisions when pricing is favorable. Businesses can also choose to lock in portions—or the entirety—of their load when market conditions align with their goals.
At the same time, supply strategy is only part of the equation. Energy efficiency plays an equally critical role in managing total cost. Even the most competitive electricity rate can be offset by inefficient HVAC systems or outdated lighting. Reducing overall consumption remains one of the most reliable ways to control long-term energy spending.
Natural Gas Production: Lower 48 States
Weather Outlook
Expect widespread heat across the southern two-thirds of the U.S., with temperatures in the 90s to low 100s. Southwest desert regions will see extreme highs between 111–115°F.
The northern U.S. will be more moderate, with temperatures mostly in the 70s and 80s, though some areas may reach the 90s. Elevated temperatures are expected to drive strong national energy demand over the next seven days.
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.
