Your electricity bill will make you sweat this summer as forecasts call for hotter-than-normal temperatures and soaring natural gas prices.
According to the U.S. Energy Information Administration, the average US household will pay about $186 per month for electricity during June, July, and August, up 4 percent from last year and nearly 26 percent higher than four years ago.
The main driver of the increase is a 37 percent jump in natural gas prices compared to the same time last year.
New England residents will bear the brunt of the rise, with monthly electricity bills expected to jump 6.7 percent to around $200. The region’s limited gas pipeline infrastructure continues to make it one of the most expensive places in the country for energy.
Electricity costs on the Pacific Coast, however, are expected to fall slightly, down 1 percent from last summer to an average of $176 per month.
Natural gas, long used mainly for winter heating, has become a cornerstone of summer power generation. As air conditioners work overtime during hotter summers, utilities are increasingly turning to gas-fired power plants to meet demand.
Last summer, one of the hottest on record, saw record levels of gas burned for electricity, with power plants accounting for 41 percent of the nation’s gas consumption, up from 40 percent the year before.
As electricity demand peaks during heatwaves, utilities also rely more heavily on “peaker” plants, which are less efficient, part-time power stations that further increase gas consumption and drive up prices.
Natural gas futures ended last week at $3.784 per million British thermal units, a 9.8 percent weekly increase. Analysts expect the rally to continue. Energy trading firm EBW Analytics predicts prices will top $4 by August, when demand typically peaks.
Morgan Stanley is even more confident, forecasting prices above $5 in the second half of the year.
“Supply is not on track to keep pace with demand growth,” Morgan Stanley analysts warned in a client note last week, the Wall Street Journal reports.
Much of the pressure comes from surging demand for liquefied natural gas exports. A new LNG terminal in Plaquemines Parish, Louisiana, has begun operations ahead of schedule and is consuming more gas than anticipated. That’s raising concerns about competition for limited pipeline capacity in the Southeast, where power plants are also ramping up for summer.
“This is putting stress on gas supply in the Southeast and driving significant price volatility in those markets,” Oren Pilant of East Daley Analytics told WSJ.
The recent spike in prices comes after a two-year glut had depressed the gas market. A warm winter left stockpiles brimming last year, prompting producers to scale back output. But strong demand from both LNG exporters and utilities, combined with a colder winter and resumed drilling, helped erase the surplus. In March, gas futures hit their highest levels since 2022.
Consumers saw some temporary relief this spring as mild temperatures allowed stockpiles to be replenished. The EIA reported last week the seventh straight large increase in gas inventories since late April, putting reserves 4.7 percent above the five-year average.
