While U.S. residential electricity prices are projected to increase about 6% this winter, wholesale electricity prices are expected to jump more than 60% in some regions of the United States, according to the U.S. Energy Information Administration (EIA).
The EIA released Tuesday (Dec. 6) the December Short-Term Energy Outlook that projected wholesale electricity prices will be higher in every U.S. region this winter compared to last winter. The price increases range from 31% higher in the Southwest to more than 60% higher in the mid-Atlantic and Central regions.
“Although we expect that U.S. electricity customers will pay more for electricity, we do not expect retail electricity prices to increase as much as wholesale prices this winter,” said EIA Administrator Joe DeCarolis.
U.S. residential electricity prices are expected to rise by 6% to an average of 14.5 cents per kilowatt-hour this winter, from last winter.
In January, the New England region could have wholesale electricity price peaks as high as $215 per megawatt-hour, which would be more than three times higher than peak rates in other U.S. regions. Limited natural gas pipeline capacity is expected to lead the region to import more liquefied natural gas (LNG) or fuel oil to meet electricity demand this winter. Global LNG demand is projected to be stronger than average this winter, contributing to the region’s disproportionately large wholesale electricity prices increase.
Following are other highlights from the December Short-Term Energy Outlook:
- In 2023, U.S. natural gas production is expected to rise to an average of more than 100 billion cubic feet per day for the first time. Pipeline constraints have limited production growth in the Permian Basin of Texas and New Mexico, but the constraints are expected to be resolved more quickly than previously projected.
- Crude oil production in Venezuela is expected to rise slightly in the second half of 2023 after the United States ruled that Chevron can resume production there. DeCarolis noted uncertainty in the production forecast for Venezuela but expected production to rise “somewhat next year.”
- Electricity generation from wind and solar power in Texas is expected to grow in 2023. Wind power is expected to account for 29% of the state’s electricity generation in 2023, up from 25% in 2022. The share of electricity generation from solar is projected to rise to 8% in 2023, from 5% in 2022. “Renewable sources will play a key role in meeting electricity demand in Texas during peak daytime hours,” DeCarolis said.