A surge in natural gas prices this winter was a reminder of the relationship between fuel markets and wholesale electricity prices.

In the latest episode of our Power Trends podcast, U.S. Energy Information Administration’s (EIA) Energy Economist Andrew Iraola and Industry Economist Lindsay Aramayo unpack what drove the recent electricity price spikes, natural gas constraints, and what we can expect in the months ahead.

Aramayo discussed recent price volatility, noting that wholesale electricity prices averaged about $70 per megawatt-hour (MWh) in New York prior to Winter Storm Fern.

“By the time we released our February Short-Term Energy Outlook (STEO), those prices had increased to $220 per MWh,” she said. “That helps you see how volatile wholesale prices can be, and how dependent they are on natural gas prices.”

New York relies on natural gas for residential heating and electricity production. Winter Storm Fern sharply increased heating demand while temporarily reducing natural gas availability. The disruptions to natural gas supply were caused in part by “freeze‑offs,” which occur during extreme cold when water and other liquids freeze and block the flow of natural gas.

The reduction in fuel availability contributed to record natural gas withdrawals and a jump in gas prices.

Iraola noted the behavior of the system in January and February often helps guide the rest of the year. If there is a large storage withdrawal, that can keep inventories below the five-year average, which puts upward pressure on prices. It also makes it more difficult to rebuild inventories during injection season, which runs from March through October.

The discussion underscored why natural gas remains a key driver of electricity costs, particularly in regions like New York that sit at the end of the natural gas pipeline system. This can create tighter constraints during peak demand.

According to Aramayo, data center buildout is a driver of electricity demand in other regions including the Mid-Atlantic and South. In New York, it’s electrification of the transportation and building sectors that’s driving demand. EIA’s reports note that natural gas will remain the dominant fuel for power generation and predict natural gas price increases, driven by stronger demand, will continue to place upward pressure on wholesale electricity prices in the coming years.

The STEO reflects an increasingly complex and uncertain energy environment, the economists said. When evaluating natural gas markets, analysts consider volatility shaped by weather, infrastructure constraints, and fluctuating demand.

Understanding these dynamics is essential for making sense of wholesale electricity prices and for planning a reliable, affordable grid.

Additional Resources

• U.S. Energy Information Administration Short-Term Energy Outlook (STEO)
• NYISO Winter Electricity Pricing Resource Page

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Electricity prices are rising across New York, and understanding what drives those costs has never been more important. In this Power Trends podcast, NYISO Vice President of Market Structures Shaun Johnson breaks down the factors shaping today’s electricity supply charges and explains how wholesale markets produce the most cost-efficient solutions to meet consumer demand.

Wholesale electricity supply costs have been climbing as natural gas prices — New York’s primary fuel for electricity — have nearly doubled in the past year. Most of what customers pay goes toward utility delivery charges, taxes, and other non-supply components.

Electricity bills can be confusing, but Johnson breaks down the two primary charges:

• The supply cost makes up approximately one third of your bill.
• The other two thirds are the retail rates your utility company charges plus taxes and fees.

The physical composition of the gas pipeline infrastructure factors into retail delivery costs as well. Because New York and New England sit at the tail end of a pipeline network that originates in the Colorado Rockies and the Gulf Coast, delivery costs to northeastern states are among the highest in the nation.
As the state moves toward greater electrification and new large loads emerge, demand is expected to keep growing. At the same time, aging generation and long lead times for new resources are tightening supply. These realities put upward pressure on prices too.

“Our market philosophy has always been sort of simple,” Johnson notes, “how do we keep the lights on at the lowest cost via competition.”

Check out the complete podcast to explore how wholesale markets function, what’s driving today’s costs, and how NYISO works to maintain grid reliability at the lowest cost — even when fuel prices surge.

More resources

Please visit our new winter pricing resource page to explain what's behind rising costs.

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New York’s electric grid is at an inflection point. In the latest Power Trends podcast, Senior Vice President of System and Resource Planning Zach Smith unpacks two critical reliability reports recently issued by the NYISO: the Comprehensive Reliability Plan (CRP) and the 2025 Third Quarter Short-Term Assessment of Reliability (STAR).

These studies reveal the grid’s mounting challenges—from aging generation and accelerating power plant retirements to surging demand driven by electrification and large-scale industrial projects. Extreme weather and supply chain constraints add complexity in planning for the future, Smith says.

He notes that assumptions over the next 10 years must also consider a reduced ability to depend on electricity imports from neighboring grids in the future.

“We are part of the Eastern Interconnection and it’s one of the most amazing machines in the world—it’s the entire eastern half of North America,” says Smith, explaining that it has long been a key factor in supporting reliability. “However, our neighbors are experiencing these same strained conditions that we are.”

To address these uncertainties, the NYISO is proposing to shift from a single forecast approach to one that considers multiple plausible futures to examine reliability under a range of scenarios. He highlights the urgent need for dispatchable resources to complement the build-out of renewables and energy storage, and the importance of projects like the Champlain Hudson Power Express for New York City and Long Island.

Check out the full episode to learn how NYISO is adapting its planning process to maintain reliability during this pivotal moment. The current energy landscape requires an “all of the above” approach to generation, transmission, and demand-side solutions.

Additional Resources:

· 2025-2034 Comprehensive Reliability Plan (CRP)

· Short-Term Assessment of Reliability: 2025 Quarter 3 (STAR)

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• Follow us on X/Twitter @NewYorkISO, LinkedIn @NYISO, Bluesky @nyiso.com
• Read our blogs and watch our videos