The weather for the three-month winter period December 2024-February 2025 was considerably colder than most of the forecasts had previously indicated. The National Oceanic and Atmospheric Administration (NOAA) in November forecasted average temperatures in New England to be 50%-60% chance of above average December – February. That didn’t materialize, and January was the coldest since 1988 across the US overall. Cold weather in New England persisted throughout most of January through the third week of February, finally normalizing for the fourth week.

Figure 1 depicts the US average temperatures.

Although the weather wasn’t unprecedented, it was persistently cold enough to drive spot market energy prices up considerably higher than we’ve seen for most of the past 6 years, with 2022 as the exception. Elevated daily market natural gas prices translated directly to higher spot market electricity prices because of the high dependency on natural gas for electricity generation in the northeast. The January electricity price (energy-only) averaged 13.6 cents per kWh in NH and approximately the same throughout the six New England states, as opposed to the previous 6-year average of 6.6 cents/kWh.

During the first 3 weeks of February spot market electricity averaged 14.6 cents/kWh. The milder temperatures in the fourth week drove the average for the month down to 12.8 cents.

Figure 3 depicts the lower-than-normal temperature comparison in NE and NY.

The first couple days of March continued to present a volatile market.  Sunday March 2 was the colder of the two weekend days.  Overnight lows on Sunday and Monday were in the single digits, yet prices didn’t reflect the same higher levels that would be expected.  To keep things interesting, on Sunday from 9 am to 4 pm the wholesale spot price of electricity was negative for that 8-hour period, averaging -3.7 cents/kWh.  Any end-user buying electricity on the spot market at that time was actually paid for their use.

Future Energy Price Trends Across 2026, 2027 and 2028

On the expectations of a mild winter coupled with a robust natural gas storage inventory, electricity futures dropped for 4 months until turning around at the beginning of November and increasing on a steady climb through the third week of February.  Natural gas took a similar track.

Natural gas storage inventories diminished throughout the winter, falling below the 5-year average for the first time since the winter of 2022-2023.  In the first week of March record exports of LNG pushed natural gas futures above $4.  The surging demand for LNG in Europe will continue to affect natural gas prices in the US and NE.

At the end of the third quarter, natural gas storage levels were below the 5-year maximum, but well above the 5-year average.  With temperatures throughout most of the country this summer considerably higher than average with many areas breaking records, both for temperatures as well as extended durations of over 100 degrees, natural gas injections into storage overall were lower than expectations. However, during the 4th quarter, storage levels rebounded to above the 5-year maximum, a favorable position heading into the winter.  As a result of the cold winter, storage levels in January and February fell below the 5-year average and very close to the 5-year minimum, a factor in the higher spot electricity prices. 

Note: Electricity prices referenced here are energy-only and do not reflect a total electricity supply price that includes capacity, ancillaries, RECs, Fuel Security, etc.  Additionally, natural gas prices referenced are NYMEX only and do not include basis and capacity costs.