Thanks to a generally mild April, we saw prices start to fall through the month. As we get closer to the start of higher capacity prices on 6/1/2025, end users will see their prices rise as more of those high-priced months are considered in their quotes. We’ve also seen a sharp rise in market volatility during the last week of April that looks poised to continue into May.

We continue to see market fundamentals that are worrisome for energy buyers:

The number of US gas drilling rigs is about 15% lower than this time last year. With Oil prices falling, this could lead to a correlated reduction in gas production long term.

Natural Gas storage injection levels are now just above the 5-year average and 435 Bcf below last year.

PJM continues to face issues related to its capacity market structure and as a result of cases brought against them, have moved the 26/27 auction to July. We saw a major development this month with FERC approving the cap of $325 and floor of $175 for the 26/27 and 27/28 auctions. This offers some short-term certainty but does little to solve the long-term issue of potential generation capacity deficits.

The wholesale energy markets watch these factors, and changes can push prices up or down on a daily basis. Based on where we stand now, we recommend evaluating these strategies:

We recommend locking in your energy price through at least the next 12 months as soon as practical. With the forward curve flattening, longer terms are becoming more attractive.

Consider a capacity and or transmission passthrough structure. While we now have a capacity cap for certain years, different suppliers may use different estimates, making these offers more difficult to compare than a passthrough structure.

Invest in a plan to reduce your peak demand and overall energy consumption, if you haven’t already. With the rise in capacity prices seemingly here to stay, lowering your associated PLC and or NSPL tag could have substantial price benefits for the following year.

Action Advice

Your to-do list for May and heading into summer:

Make sure you have a good relationship with a trusted energy advisor – you will want to have someone with experience and expertise watching the markets for you.

As you budget for 2025 and beyond, expect prices to be higher than you are paying now.

Monitor the broader economic conditions as these can influence energy prices.

Want to help your business navigate the current market? Get started with your Shipley Energy Advisor today!

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