As we move into summer, energy prices remain volatile — and the risks for Ohio businesses behind AEP and Columbia Gas continue to grow. Whether you manage a manufacturing plant, a school district, or a small business, understanding what’s driving today’s energy markets can help you make more informed decisions.  As we’ve discussed in our monthly newsletter since last August and through many one on one customer conversations, June 1 begins PJM’s much higher Capacity cost increase due to the fast growing future load growth demand for power over the next 5 – 10 years

Short-Term Price Drivers – Summer 2025

• Above-Normal Summer Temperature Forecast
  NOAA projections show a hotter-than-average June–August. Increased air conditioning load will likely drive up power demand and push natural gas-fired generation into overdrive.  However, temperature forecast for the first couple of weeks of June is currently expected to average below normal in the Midwest and northeast.
• Natural Gas Storage Levels Are Back To Normal After Exiting Winter With a Deficit Strong year over year natural gas production, weak LNG exports due to facility maintenance and an abnormally warm March and April followed by a cool May has resulted in very high weekly storage injections eliminating the winter storage deficit.
• Much Higher Natural Gas “Basis” In The Appalachia Region
  Any natural gas utilities receiving natural gas from TC Energy will show higher “basis” costs due to April’s TC Energy sizeable transportation rate increase.  However, more worrisome is much higher basis seen on the utility Enbridge (formerly East Ohio Gas) that is likely a early indicator of tightening future supplies in the Appalachian production region.

Long-Term Price Drivers – 2025 and Beyond

• AI Data Centers & Electrification Growth
  PJM’s latest forecast expects a 1.4% annual growth in power demand – nearly double prior projections – driven by AI, electrification, and manufacturing reshoring. That means tighter grid capacity and rising future energy prices.

• Capacity Market Pricing Surge
  The 2025 PJM capacity auction saw prices triple for many Ohio zones, especially behind AEP, First Energy and AES. These costs will hit electricity supply rates starting in June 2025 and beyond — and they’re here to stay for at least three years if not longer.
• LNG Export Expansion
  U.S. natural gas exports to Europe and Asia continue to grow. With global LNG demand expected to rise sharply in 2026–2028, U.S. prices will increasingly reflect international market conditions.  LNG exports peaked around 16 bcf/day in April and is forecasted to grow to around 18 bcf/day by the end of 2025 – very bullish for future natural gas prices
• Aging Generation & Regulatory Pressure
  Between now and 2031, up to 58 GW of generation could retire across PJM. Only a fraction is being replaced in time, adding long-term reliability concerns and further pressure on power prices

What Ohio Businesses Can Do Now

• Review your energy contracts – While RD Energy has worked has worked closely with clients updating energy contracts and procurement strategies over the past 12-18 months, we’re finding many non RD Energy businesses, schools, restaurants, etc. who are still tied to outdated supply deals or paying monthly variable rates WELL above market for both electric and natural gas.  Also absent is any knowledge or strategic use of Peak Load Management and Demand Response to lower the impact of the higher PJM capacity costs.
• Benchmark your current energy cost – Find out if costs can be reduced and better procurement strategies can be implemented – RD Energy provides a no-cost cost analysis so you know how your business or school is positioned.
• Plan ahead – Lock in competitive long-term pricing before the next wave of market increases. The key is buying at the right time as energy market price trends are volatile up and down making procurement “timing” critical

June begins the kickoff of much higher PJM capacity costs for Ohio consumers.  Power and natural gas prices are forecasted to rise in Q3 and Q4 2025 as well as through much of 2026.  RD Energy #1 priority is helping our clients navigate the complexities of today’s energy landscape. However, we’re finding nearly every day businesses that are paying double and sometimes triple market prices with no knowledge of how to implement and procure energy using strategies and tools available.  Whether our RD Energy clients throughout Ohio are passing our contact information on to their business friends and partners or we’re contacted through our chamber affiliations, we’ll do our very best to help each business understand their energy spend position and offer advice and ideas on how to a better lower cost energy procurement strategy.  We strongly believe in getting and staying ahead of the curve.  If you have questions in the coming weeks as your get your utility bills, please feel free to contact us.