Energy markets don't stand still. Wholesale power and natural gas prices can shift 20–40% within a single contract year, and buyers who aren't watching often discover the change only when a renewal quote lands on their desk. This quarterly outlook summarizes the key drivers shaping price levels across deregulated North American markets — and what commercial and industrial buyers should be thinking about right now.
Natural Gas: A Tighter Market Than Last Year
Domestic natural gas production remains high, but export demand through LNG terminals has absorbed a meaningful portion of the supply surplus that kept prices soft through 2024. Henry Hub spot prices in Q2 2026 are running roughly 12% above the same period last year, with the forward curve pricing modest additional increases through the winter injection season.
For commercial gas buyers, this creates a straightforward risk: rolling onto a floating or index-linked supply contract today means taking on exposure to seasonal price spikes. The buyers we're seeing lock in the best outcomes are those who sign fixed or blended contracts before the summer injection season tightens storage further.
Buyer takeaway: If your natural gas contract renews in Q3 or Q4 2026, you're in a window where locking a fixed rate now — before the winter premium builds in — is likely to look smart in hindsight.
Power: Softening Forwards, But Regional Divergence is Wide
Forward electricity prices at the national level have pulled back modestly from their 2025 highs, driven primarily by expanded renewable capacity additions across PJM, ERCOT, and MISO. However, that aggregate number conceals significant regional variation. Congestion charges and capacity costs remain elevated in pockets of the Northeast and Mid-Atlantic, where transmission constraints haven't kept pace with load growth.
What's driving regional spread
- Transmission congestion: Bottlenecks in PJM's western hub and parts of ISO-NE continue to produce basis differentials well above historical norms.
- Capacity costs: Upcoming capacity auction results in several RTOs are expected to reflect tighter reserve margins as older generation retires faster than new capacity comes online.
- Renewable intermittency: Higher solar and wind penetration means shorter windows of very cheap power — but also sharper mid-day pricing drops that sophisticated buyers can exploit through demand response or flexible load agreements.
What the Curve Is Telling Us for 12–36 Months Out
The 12-month forward strip for electricity is down modestly, presenting what brokers typically call a "buy window" — meaning buyers who haven't locked forward supply have an opportunity to contract at levels below where most analysts expect the settled price to land. Beyond 18 months, the curve steepens, reflecting market uncertainty around capacity costs and fuel price risk.
For buyers with contract expirations coming up, the implication is clear: waiting for a better price is a bet against the forward curve. The buyers who will look back on 2026 renewals favorably are those who move when the opportunity is visible, not after it has passed.
Buyer takeaway: If you have 6–18 months before your electricity contract expires, the current 12-month forward strip is worth benchmarking against your current rate. It may be the most favorable window you see before the next capacity cycle tightens things up.
Contract Structures We're Recommending This Quarter
Not every buyer has the same risk tolerance, and the "right" contract structure depends on your load profile, budget flexibility, and how much price volatility your business can absorb. Here's our general posture for Q2 2026:
- Fixed-price supply: Appropriate for buyers who want budget certainty and whose load is predictable. Current forward prices are competitive — this is a reasonable time to lock.
- Blended/layered: For buyers with larger loads or longer runway before expiration, purchasing supply in tranches (partial fixed, partial floating) can capture some of the current price softness while hedging against spikes.
- Index/float: Only for buyers with genuine appetite for volatility and strong load flexibility. The gas-linked index exposure this winter carries real downside risk.
Watching: Demand Charges and Grid Fees
One dynamic that often goes unnoticed in market outlooks is the trend in utility delivery charges — the regulated component of your bill that doesn't change with your supply contract. Several large utilities have pending rate cases that would increase demand charges and transmission riders in 2026–2027. Buyers whose procurement strategy focuses only on supply rate and ignores delivery cost are missing a material portion of total energy spend.
If your utility has a rate case pending, it's worth understanding the proposed changes before your next contract decision. A lower supply rate won't offset a sharp delivery charge increase.
How to Use This Outlook
Market outlooks are a starting point, not a decision. Every buyer's situation is different — your load profile, contract expiration dates, risk tolerance, and relationship with your utility all shape what the right move looks like. The purpose of this report is to give you enough context to ask better questions and to recognize when the window for action is open.
If you'd like to see how current market prices compare to your specific rate — and whether your next renewal is approaching at a good time or a difficult one — we're glad to run that analysis. It's free, and it takes about a business day.
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