Peach Tree Times

The U.S. Energy Information Administration's (EIA) release of data for its short-term energy outlook last week offered grim news for Americans with the colder months approaching as limited natural gas production combined with a higher demand for natural gas means higher prices.  

The data reveals significantly higher wholesale electricity prices expected this winter in all supply regions analyzed. In Georgia, residents can expect to spend more than 50% more on electricity than they did a year ago. 

"We expect higher wholesale electricity prices this winter in every region of the country," the EIA said on Twitter. "Our forecast for wholesale winter electricity prices ranges from 31% higher in the Southwest to more than 60% higher in the Mid-Atlantic and Central regions." 

This comes as the EIA reports that Georgia and the other states in the Southeast region are expected to see average electricity prices 54% higher this winter when compared to winter a year ago. 

There are 11 Short-Term Energy Outlook (STEO) electricity supply regions that the EIA analyzes on a monthly basis. This month's data shows an average 50.6% increase in average on-peak wholesale electricity prices across the United States.

According to EIA data, Mid-Atlantic and Central region states that rely on the Pennsylvania, New Jersey and Maryland (PJM) and the Southwest Power Pool (SPP) electricity supply chains will see the most significant price increases during the upcoming winter months when compared to last. 

The 2022-2023 forecast for electricity prices in both regions for December through February is expected to be 62% higher than that of the winter months in 2021-2022.

The New England region, poised to experience the highest wholesale prices this winter, is expected to average in excess of $180 per megawatt-hour and could have wholesale electricity price peaks higher than $200/MWh in January, the data shows. This is more than three times higher than peak rates elsewhere in the country.

EIA data reveals the smallest winter-over-winter price increase will be on the West Coast. The spike, however, is still significant, as the California ISO electricity supply chain region will experience 33% higher prices compared to last winter.

Retail electricity prices are also expected to be higher. The EIA forecasts residential electricity prices to average 14.5 cents per kilowatt-hour in the core winter months December through February, 6% higher than last winter. Price increases range from almost no change in the West North Central region to 18% in the New England region.

The EIA expects limited natural gas production in the Permian Basin into early 2023, driven by the lack of pipeline capacity to bring associated natural gas production to market. This, along with higher winter natural gas demand and rising liquid natural gas (LNG) exports, are contributing to the expected higher prices.