Electricity Rate Trends 2026: When to Lock In Your Price

Most people never think about how electricity gets priced. Two markets drive it.

The wholesale energy market sets what it costs to generate power right now. Natural gas prices dominate here since gas fuels 40-55% of U.S. power plants. The capacity market is different - it pays power plants just for staying available during peak demand, keeping the grid from falling short.

In 2025, both markets are getting hammered. Natural gas jumped 82% from $2.20 to roughly $4/MMBtu. The PJM capacity auction - and this is the big one - saw an 833% price increase for 2025-2026. That's not a typo. Eight hundred thirty-three percent. These numbers point to serious supply constraints.

ElectricRates.org tracks competitive offerings across Texas, Ohio, Pennsylvania, and Massachusetts to help identify when to lock in fixed-rate contracts.

PJM Interconnection operates the wholesale electricity market serving 65 million people across 13 states, including Ohio and Pennsylvania.

The historic capacity auction in July 2024 was a wake-up call. Capacity prices jumped from $28.92 to $269.92 per MW-day - an 833% surge and the most dramatic in PJM history. The bill impact starts in June 2025, with projections showing 10-20% total bill increases across the PJM footprint.

Current average residential rates sit at 15-17.61¢/kWh in Ohio and 17.44-20.46¢/kWh in Pennsylvania.

What's causing this capacity crisis? Accelerating power plant retirements, explosive data center demand growth, and generation resource adequacy challenges all play a role. Here's the kicker: data centers account for roughly 63% of recent capacity price increases. That's an enormous driver that most people don't realize.

Massachusetts operates within the ISO New England market, serving six New England states.

Here's a sobering fact: Massachusetts has the highest electricity costs in the continental U.S. Average residential rates run 29.94-34¢/kWh, which is about 72% above the national average. ISO New England pricing in January 2025 saw wholesale power prices reach $135.08/MWh, a 112% year-over-year increase.

Why are Massachusetts rates so high? Winter creates pricing volatility due to natural gas pipeline constraints. Fuel supply gets limited precisely when heating demand peaks. The state relies heavily on natural gas generation but has limited pipeline infrastructure, creating a structural cost premium that isn't going away anytime soon.

There's additional exposure to consider: utility default service rates reset every six months, which exposes customers to wholesale volatility.

ElectricRates.org monitors Massachusetts competitive rates across Eversource, National Grid, and National Grid Nantucket Electric.

Natural gas serves as the marginal fuel for electricity generation across most U.S. markets. This means gas-fired plants typically set wholesale electricity prices hour by hour.

The price transmission mechanism is pretty direct: when natural gas prices rise, electricity costs follow almost immediately. That cost flows through to retail customers with varying lag times depending on contract structures.

The 2025 natural gas outlook from EIA projections shows spot prices averaging about $4/MMBtu, up 82% from the $2.20/MMBtu average in 2024. Why the surge? Production constraints, strong LNG export demand, domestic consumption growth, and inventory dynamics are all contributing factors.

Here's the key insight most people miss: even customers in regions with coal, nuclear, or renewable generation feel the impact. Natural gas plants set the marginal price during most operating hours, so everyone pays more when gas prices rise.

Electricity demand and pricing follow predictable seasonal patterns driven by weather-dependent consumption.

Peak demand happens in summer (June-August) when air conditioning drives consumption and in winter (December-February) when electric heating increases load. The shoulder seasons of spring and fall see lower overall demand and more moderate pricing.

The wholesale price differentials can be dramatic. Summer peak hours in PJM and ISO New England can run 3-5x higher than off-peak shoulder season periods.

This creates strategic timing opportunities. Contracts signed during shoulder seasons capture more favorable wholesale conditions. March-April is your best window, and September-October is the other good one. If you can time your contract signing to these periods, you'll generally get better rates.

For Ohio in 2025, utility default rates will likely stay in the 15-17.61¢/kWh range. Competitive supply can run as low as 9.29¢/kWh, though June 2025 PJM capacity charges will push total bills higher.

Pennsylvania's 2025 forecast shows average residential rates of 17.44-20.46¢/kWh, expected to climb 10-20% when capacity charges reset. Competitive supply currently starts around 10.09¢/kWh.

Massachusetts faces the most challenging 2025 forecast. Residential rates are already in the 29.94-34¢/kWh range and expected to remain under pressure. Winter 2025-2026 could test new price highs if natural gas constraints coincide with cold weather.

Market timing makes a real difference when locking in fixed-rate electricity contracts.

The best windows for 2025 are March-April (before June capacity charge increases hit Ohio and Pennsylvania) and September-October (after summer peak but before winter volatility).

The current market creates urgency. PJM capacity charges will jump in June 2025, natural gas prices are trending higher, and wholesale electricity markets show upward pressure across the board.

Don't miss the window. ElectricRates.org provides automated rate alerts that notify you when rates fall below your threshold and signal when market conditions favor contract timing.

Electricity supply contracts come in two fundamental structures.

Fixed-rate plans give you a guaranteed constant ¢/kWh price for the contract term. You get budget certainty and price protection, and in rising markets, you lock in today's pricing before increases hit.

Variable-rate plans fluctuate monthly based on wholesale conditions. They expose you to market movements and offer no protection against price spikes.

For 2025-2027, fixed-rate strategies are strongly favored given the upward market pressure. In rising markets, longer contracts of 24-36 months provide extended protection and cover multiple price increase cycles.

My recommendation: Texas, Ohio, Pennsylvania, and Massachusetts consumers should prioritize fixed-rate contracts of 12-24 months during the March-September 2025 window.

ElectricRates.org operates as a rate comparison and monitoring platform for deregulated markets.

The platform aggregates competitive supply rates from licensed suppliers across Texas, Ohio, Pennsylvania, and Massachusetts, giving you real-time rate comparisons by utility territory, rate class, and contract terms.

The automated rate alert system monitors competitive rates continuously. It notifies you when rates drop below your threshold, signals when market conditions favor contract timing, and eliminates the tedious manual rate shopping process.

We cover 13 utility territories: in Ohio, that's AEP Ohio, Duke Energy, AES Ohio, Ohio Edison, Toledo Edison, and Cleveland Illuminating. In Pennsylvania, we cover PECO, PPL Electric, Met-Ed, and Duquesne Light. In Massachusetts, we track Eversource, National Grid, and National Grid Nantucket Electric.

The platform also includes utility-specific account number validation and enrollment support.

For immediate action, review your current electricity supply contract and expiration date. If you're on utility default service or a variable-rate plan, you're fully exposed to June 2025 PJM increases in Ohio and Pennsylvania, or ISO New England volatility in Massachusetts. Visit ElectricRates.org to compare current competitive rates.

For near-term planning, if your contract expires between now and May 2025, prioritize securing a new contract before June capacity charges kick in. Target fixed-rate contracts of 12-24 months to lock in current pricing.

For long-term strategy, develop a proactive contract management approach. Track your expiration dates, monitor wholesale market trends, and plan renewals during the best windows in March-April and September-October.

Check your rates now at ElectricRates.org and lock in fixed-rate protection before June's capacity charge increases hit your monthly bills.