2025 Electricity Rate Forecast and When to Lock In Rates

What Drives Electricity Prices in 2025

Electricity pricing operates through two distinct markets: Wholesale energy market:

Determines cost of generating electricity right now
Driven by natural gas prices (fuels 40-55% of U.S. power generation)

Capacity market:

Compensates power plants for staying available during peak demand
Ensures grid maintains adequate reserves

🚨 2025: Both markets under unprecedented stress

Natural gas prices surged 82% (from $2.20 to ~$4/MMBtu)
PJM capacity auction: 833% price increase for 2025-2026
Signals fundamental supply constraints

ElectricRates.org tracks competitive offerings across Ohio, Pennsylvania, and Massachusetts to help identify when to lock in fixed-rate contracts.

PJM Region Deep Dive - Ohio and Pennsylvania

PJM Interconnection operates the wholesale electricity market serving 65 million people across 13 states, including Ohio and Pennsylvania. 🚨 Historic capacity auction (July 2024):

Capacity prices jumped from $28.92 to $269.92 per MW-day
An 833% surge—most dramatic in PJM history
Bill impact: Starting June 2025
Projected: 10-20% total bill increases across PJM footprint

Current average residential rates:

Ohio: 15-17.61¢/kWh
Pennsylvania: 17.44-20.46¢/kWh

Root causes of capacity crisis:

Accelerating power plant retirements
Explosive data center demand growth
Generation resource adequacy challenges
Data centers account for ~63% of recent capacity price increases

ISO New England Analysis - Massachusetts

Massachusetts operates within the ISO New England market, serving six New England states. ⚠️ Massachusetts: Highest costs in continental U.S.

Average residential rates: 29.94-34¢/kWh
~72% above the national average

ISO New England pricing (January 2025):

Wholesale power prices reached $135.08/MWh
112% year-over-year increase

Why Massachusetts rates are so high:

Winter creates pricing volatility due to natural gas pipeline constraints
Fuel supply limited precisely when heating demand peaks
Heavy reliance on natural gas generation
Limited pipeline infrastructure = structural cost premium

Additional exposure: Utility default service rates reset every six months, exposing customers to wholesale volatility. ElectricRates.org monitors Massachusetts competitive rates across Eversource, National Grid, and National Grid Nantucket Electric.

Natural Gas Prices and the Electricity Connection

Natural gas serves as the marginal fuel for electricity generation across most U.S. markets—meaning gas-fired plants typically set wholesale electricity prices hour by hour. The price transmission mechanism:

When natural gas prices rise → electricity costs follow almost immediately
Flows through to retail customers with varying lag times
Depends on contract structures

2025 natural gas outlook (EIA projections):

Spot prices averaging ~$4/MMBtu in 2025
Up 82% from $2.20/MMBtu average in 2024

Why the surge?

Production constraints
Strong LNG export demand
Domestic consumption growth
Inventory dynamics

💡 Key insight: Even customers in regions with coal, nuclear, or renewable generation feel the impact—natural gas plants set the marginal price during most operating hours.

Seasonal Price Patterns Explained

Electricity demand and pricing follow predictable seasonal patterns driven by weather-dependent consumption. Peak demand seasons:

Summer (June-August) – Air conditioning drives consumption
Winter (December-February) – Electric heating increases load

Shoulder seasons (spring/fall):

Lower overall demand
More moderate pricing

Wholesale price differentials:

Summer peak hours in PJM and ISO New England can be 3-5x higher than off-peak shoulder season periods

💡 Strategic timing opportunities:

Contracts signed during shoulder seasons capture more favorable wholesale conditions
March-April = optimal window #1
September-October = optimal window #2

2025 Rate Forecast by Region

Ohio 2025 forecast:

Utility default rates: 15-17.61¢/kWh range likely maintained
Competitive supply: As low as 9.29¢/kWh
June 2025 PJM capacity charges will push total bills higher

Pennsylvania 2025 forecast:

Average residential rates: 17.44-20.46¢/kWh
Expected to climb 10-20% when capacity charges reset
Competitive supply currently from ~10.09¢/kWh

Massachusetts 2025 forecast (most challenging):

Residential rates: 29.94-34¢/kWh range
Expected to remain under pressure
⚠️ Winter 2025-2026 could test new price highs if natural gas constraints coincide with cold weather

Best Time to Lock In Rates

Market timing matters significantly when securing fixed-rate electricity contracts. Optimal windows for 2025:

March-April – Critical pre-summer window before June capacity charge increases (OH/PA)
September-October – After summer peak, before winter volatility

🚨 Current market creates urgency:

PJM capacity charges will jump substantially in June 2025
Natural gas prices trending higher
Wholesale electricity markets show upward pressure

Don't miss the window:

ElectricRates.org provides automated rate alerts
Get notified when rates fall below your threshold
Signals when market conditions favor contract timing

Fixed vs Variable Rate Strategy

Electricity supply contracts come in two fundamental structures: Fixed-rate plans:

Guaranteed constant ¢/kWh price for contract term
Budget certainty and price protection
In rising markets, locks in today's pricing before increases

Variable-rate plans:

Fluctuate monthly based on wholesale conditions
Exposes you to market movements
No protection against price spikes

💡 2025-2027 outlook: Fixed-rate strategies strongly favored Contract term strategy:

In rising markets, longer contracts (24-36 months) provide extended protection
Covers multiple price increase cycles

Recommendation: Ohio, Pennsylvania, and Massachusetts consumers should prioritize fixed-rate contracts of 12-24 months during the March-September 2025 window.

How ElectricRates.org Helps Track Rates Automatically

ElectricRates.org operates as a comprehensive rate comparison and monitoring platform for deregulated markets. Platform features:

Aggregates competitive supply rates from licensed suppliers across OH, PA, MA
Real-time rate comparisons by utility territory, rate class, and contract terms

Automated rate alert system:

Monitors competitive rates continuously
Notifies you when rates drop below your threshold
Signals when market conditions favor contract timing
Eliminates manual rate shopping

13 utility territories covered:

Ohio: AEP Ohio, Duke Energy, AES Ohio, Ohio Edison, Toledo Edison, Cleveland Illuminating
Pennsylvania: PECO, PPL Electric, Met-Ed, Duquesne Light
Massachusetts: Eversource, National Grid, National Grid Nantucket Electric

Includes utility-specific account number validation and enrollment support.

Action Steps for Consumers

⚡ Immediate action:

Review your current electricity supply contract and expiration date
If on utility default service or variable-rate plan → fully exposed to June 2025 PJM increases (OH/PA) or ISO New England volatility (MA)
Visit ElectricRates.org to compare current competitive rates

📅 Near-term planning:

Contract expires between now and May 2025? Prioritize securing new contract before June capacity charges
Target fixed-rate contracts of 12-24 months to lock in current pricing

📈 Long-term strategy:

Develop proactive contract management approach
Track expiration dates
Monitor wholesale market trends
Plan renewals during optimal windows (March-April and September-October)

🚨 Check your rates now at ElectricRates.org and lock in fixed-rate protection before June's capacity charge increases hit your monthly bills.

Frequently Asked Questions

Why are electricity rates rising so much in 2025?

Three major factors drive 2025 electricity rate increases. First, the PJM capacity market auction delivered an 833% price increase from $28.92 to $269.92 per megawatt-day, affecting Ohio and Pennsylvania starting June 2025. Second, natural gas prices have surged 82% to approximately $4 per MMBtu from $2.20 in 2024, directly increasing generation costs since gas-fired plants fuel 40-55% of U.S. electricity production. Third, data center demand growth accounts for 63% of recent capacity price increases, creating unprecedented grid stress.

What is the difference between PJM and ISO New England?

PJM Interconnection and ISO New England are independent system operators managing wholesale electricity markets in different regions. PJM operates the grid serving 13 states including Ohio and Pennsylvania, covering 65 million people. ISO New England manages the six-state New England region including Massachusetts. Ohio and Pennsylvania electricity rates are determined by PJM wholesale market dynamics, while Massachusetts rates reflect ISO New England prices. Both markets face upward rate pressure in 2025, but PJM confronts an 833% capacity price surge while ISO New England battles winter volatility and natural gas pipeline constraints.

When is the absolute best time to lock in electricity rates?

The optimal times to lock in fixed-rate electricity contracts occur during shoulder seasons: March-April and September-October. These periods capture lower wholesale electricity demand between peak summer and winter seasons, when competitive suppliers typically offer their most attractive rates. For 2025, March-May represents the critical window for Ohio and Pennsylvania customers to secure fixed rates before PJM capacity charge increases hit bills in June. Massachusetts customers should target these same windows before seasonal pricing volatility.

How does natural gas affect my electricity bill?

Natural gas serves as the marginal fuel setting wholesale electricity prices because gas-fired power plants generate 40-55% of U.S. electricity. When natural gas prices rise, electricity generation costs increase almost immediately in wholesale markets. The 82% natural gas price surge from $2.20 per MMBtu in 2024 to approximately $4 per MMBtu in 2025 directly drives higher electricity costs across PJM and ISO New England markets. Even all-electric homes face this exposure since they depend entirely on grid electricity.

Should I choose a 12-month or 24-month electricity contract?

In the current rising rate environment, 24-month fixed-rate contracts provide superior value compared to 12-month terms. The PJM capacity charge increase hitting Ohio and Pennsylvania in June 2025 will persist through 2026 at minimum, with analysts expecting elevated pricing through 2027. Natural gas prices similarly show multi-year upward pressure. A 24-month contract signed in early 2025 locks in current pricing and extends protection through mid-2027, avoiding multiple renewal cycles in a rising market.

How can ElectricRates.org help me navigate rising electricity costs?

ElectricRates.org provides comprehensive electricity rate comparison and monitoring across Ohio, Pennsylvania, and Massachusetts deregulated markets. The platform aggregates real-time competitive supply rates from licensed suppliers across all 13 covered utility territories. Automated rate alerts notify you when competitive rates drop below specified thresholds or when market conditions favor contract timing. The platform calculates potential annual savings based on your consumption profile and provides enrollment support without hidden fees or supplier bias.

About the author

Han Hwang

Consumer Advocate

Han joined ComparePower with years of experience building and scaling digital marketplaces. He brings that expertise to ElectricRates.org, focused on making energy shopping simpler for consumers in Ohio, Pennsylvania, and Massachusetts.

Electricity marketplace operationsDigital business strategyRetail electricity marketsConsumer experience optimizationPartnership development

Topics covered

electricity rates 2025 forecast PJM ISO New England rate trends when to lock in fixed rates

Sources & References

PJM Interconnection - Capacity Auction Results (PJM Interconnection): "PJM capacity auction for 2025-2026 resulted in 833% price increase from $28.92 to $269.92 per MW-day"Accessed Jan 2025
ISO New England - Wholesale Markets (ISO New England): "ISO New England wholesale power prices and market data"Accessed Jan 2025
EIA - State Electricity Profiles (U.S. Energy Information Administration): "EIA tracks average electricity prices by state"Accessed Jan 2025

Last updated: December 10, 2025