EIA: Higher, more volatile wholesale electricity prices expected throughout United States this winter

According to the December Short-Term Energy Outlook released by the U.S. Energy Information Administration (EIA) this week, winter will bring more than cold temperatures this season and is also likely to bring higher wholesale electricity prices across the board.

In some cases, this will bring substantial increases, from 33 percent increases in California to more than 60 percent leaps in both the mid-Atlantic and Central regions. This should amount to a residential electricity price average of 14.5 cents per kW hour – a 6 percent increase over winter 2021.

Despite these jumps, the EIA added that retail electricity prices are unlikely to follow suit.

“Although we expect that U.S. electricity customers will pay more for electricity, we do not expect retail electricity prices to increase as much as wholesale prices this winter,” EIA Administrator Joe DeCarolis said.

While this might mean some relief, the New England region could experience wholesale electricity price peaks more than three times higher than those elsewhere in the U.S., reaching as high as $215 per MW hour in January. Exacerbating this will be stronger global demand for LNG than average this winter and limited natural gas pipeline capacity in the region.

At the same time, forecasts for U.S. natural gas production next year predicted an average of more than 100 billion cubic feet per day for the first time as pipeline constraints ease. Electricity generation from wind and solar power growth should also continue, particularly in Texas.