Energy Market Update: July 2025

June began with generally mild temps and load, but the extreme heat wave near the end of the month pushed the grid and prices to the extreme. Peak Day Ahead prices came in above $350 several days in a row and real time prices have several hours above $1,600. The 12-month electricity price at the start of the month was $47.65/MWh in Ohio and finished the month at$49.89/MWh.  In PA, it increased from $51.47/MWh to $52.81. Looking at longer terms there was less movement, the 36-month strip in OH rose $0.57 to end the month at $48.61.  PA was similar with an increase of $0.44 to end at $53.20. We’re now into the higher capacity rates (started 6/1/2025). For many customers this will make up a substantial portion of their all-in price and is not going to decrease for at least the next 11 months.

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. 
• Natural Gas storage injection levels are now 173 Bcf above the 5-year average but 176 Bcf below last year.  The gap to the previous year’s levels continues to narrow. 
• 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 late July.  There is a cap of $325 and floor of $175 for the 26/27 and 27/28 auctions.  While this offers some short-term certainty it does little to solve the long-term issue of potential generation capacity deficits.
• Although PJM managed to avoid operational disasters with the heat wave in June, the relative consistency of $1,000+ real-time power during super peak hours will likely mean higher risk premiums going forward. 

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 July and the rest of summer:

• As you budget for 2025 and beyond, keep in mind it is unlikely for prices to materially decrease in the next few years.
• Monitor the broader economic conditions as these can influence energy prices.
• Keep an eye out for any extreme heat events as continued price spikes may start to drive up longer term risk premiums. If you can reduce your consumption on these peak demand days, you can help lower your costs for next year.

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

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Natural Gas Market Update

• July 2025 NYMEX expired at $3.261/MMBtu.
• Natural gas storage is currently 173 Bcf over the 5-year average, and 176 Bcf behind last year’s level. We are on pace to achieve a healthy level of storage by the winter – roughly 3.9 Tcf.
• The market is dependent on the intensity of heat in populated areas as this impacts the amount of natural gas used for cooling demand in power-generation. Forecasts are calling for normal temperatures in July on the East Coast. The Ohio Valley should be looking at slightly above normal temperatures.
• A word of caution about following rig counts; we are seeing a divergence in the number of active rigs and production. This is evidence that new wells produce exponentially more gas than older ones. In short, declining rig counts do not necessarily mean declining production.

Factors impacting the natural gas markets currently

• Weather trends and NG pricing versus coal will determine the pace of injections.
• A storm in the gulf could prohibit LNG exports which would result in a bearish event.
• Recent volatility has been attributed to weather forecasts which impact demand and storage injections.

Action Advice

Due to the volatility, we recommend checking in frequently with your account manager for daily changes to the market and opportunities to lock in during sell-offs.

Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. For those who want to float their NYMEX, consider a cap and floor structure to economically manage your risk. Ask your Account Manager for details. 

July 2025 Natural Gas NYMEX Settlement Price: $3.261/MMBtu

Last month: June 2025 Natural Gas NYMEX Settlement Price: $3.204/MMBtu

Last year: July 2024 Natural Gas NYMEX Settlement Price: $2.628/MMBtu

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