US power prices see modest rise in ’25 amid gas cost increases – EIA

The US Energy Information Administration (EIA) forecasts a modest rise in wholesale power and residential electricity prices in 2025, according to its January Short-Term Energy Outlook.

Wholesale electricity prices, a key indicator of power generation costs, are projected to average $40 per megawatthour (MWh), up 7 per cent from 2024. Meanwhile, residential electricity prices are expected to increase by 2 per cent to an average of 16.8 cents per kilowatthour. After adjusting for inflation, residential prices will remain largely unchanged from last year.

Wholesale prices will vary significantly across regions, with the Southwest and California expected to see the largest increases of 30–35 per cent due to higher natural gas costs.

In contrast, Texas and the Northwest are forecasted to experience lower prices, with average rates of $30/MWh and $55/MWh, respectively. Improved hydropower generation in the Northwest and expanded solar capacity in Texas are key drivers of these regional declines.

The EIA also anticipates the cost of natural gas delivered to power generators to average $3.37 per million British thermal units in 2025, marking a 24 per cent increase from 2024 but aligning with 2023 levels. This rise in fuel costs, a major component of power generation expenses, is expected to drive higher wholesale electricity prices in most regions.

While wholesale power prices in 2025 will remain below the peak levels of 2022, when they averaged $80/MWh, the adjustments reflect ongoing changes in fuel costs, transmission dynamics, and regional power generation capacity. Retail electricity prices, which adjust more gradually, are subject to regulatory approvals and are expected to mirror wholesale trends with slight delays.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser