The U.S. Energy Information Administration expects that U.S. wholesale power prices will average slightly higher in 2025 in most U.S. regions than last year, except in Texas and in the Northwest.
It forecasts that the 11 wholesale prices it tracks in its short-term energy outlook will average $40 per megawatt hour in 2025 (weighted by demand), up 7% from 2024.
Wholesale power prices are an indicator of the cost of generating power and are generally created on an hourly or daily basis in the United States.
EIA noted that the cost of natural gas is a primary driver of wholesale prices in many regions because the marginal generator is often one fueled by natural gas. "We expect that the cost of natural gas delivered to U.S. power generators will average $3.37 per million British thermal units in 2025, which is up 24% from last year’s average but is about the same price as in 2023."
EIA expects that average wholesale power prices will range from about $30/MWh in the part of Texas where the grid is managed by the Electric Reliability Council of Texas to $55/MWh in the Northwest region. These two regions are the only ones in which it expects lower wholesale prices this year.
The Northwest region is still experiencing drought conditions, "but we expect conditions to improve slightly this year with 20% more hydropower generation. Increasing generation from solar power projects is contributing to lower wholesale prices in ERCOT."
Other regions of the country are likely to see higher wholesale prices over the next year as a result of higher costs for natural gas. "We expect the largest increases (about 30%–35%) will occur in the Southwest and California regions. Forecast wholesale prices in the ISO New England region average $55/MWh in 2025, up 16% from 2024. Although we expect higher wholesale prices in 2025, they would still be lower than in 2022, when the composite average wholesale price reached $80/MWh," EIA said.
Changes in the costs of supplying electricity can take time to affect retail electricity prices because retail rates are reviewed and approved by utility regulators in many areas of the country.
It expects U.S. retail electricity prices for residential customers will average 16.8 cents per kilowatthour, which would be 2% more than in 2024. After accounting for inflation, forecast U.S. residential prices in 2025 are relatively unchanged from 2024.
