January’s deep freeze reminded all of us of one simple truth: weather is still the fastest way to stress both the natural gas system and the electric grid at the same time—especially when gas is the primary fuel for power generation across much of PJM.

 Natural gas: forward curve price reaction for 2026 and beyond

Even when the cold is “temporary,” the market’s message is clear: storage trajectory and late-winter risk matter.  Plus, January’s extreme cold in the Midwest looks to extend into mid to late February albeit not as extreme.

• The February 2026 NYMEX closed at $7.40/MMBTU, up from the January settlement of $4.687/MMBTU and $3.906/MMBTU a year earlier in February 2025. All subsequent months from March 2026 to February 2027 also experienced notable increases, though not as high as February 2026.
• Historically, NYMEX natural gas prices dip each spring, but low end-of-season storage levels and the new injection season starting in April may change this trend. The key concern is when below-normal temperatures in the Midwest will end—mid or late February—which       will significantly impact end-of-season storage levels and 2026 price       trends for natural gas and electricity.

What RD Energy is watching most: the “hand-off” from winter natural gas storage withdrawal season to Spring’s natural gas injection season.

• If end-of-winter US natural gas storage is around 1500 BCF       (current expectations), below the past five-year average, prices for the    remaining months of 2026 are likely to rise significantly due to concerns about supply meeting domestic and export demand. Both US and European storage levels will be below normal, heightening supply worries and upward price pressure, especially as Europe relies on US LNG to reduce dependence on Russian gas.
• Wholesale natural gas prices largely drive wholesale electric prices; if natural gas prices rise, power prices will likely follow suit in a direct correlation.
• The PJM power grid faces significant supply and demand challenges, with forecasted power demand outpacing supply. Capacity prices surged 833% from the 2024/2025 to the 2025/2026 year, with further increases expected for the subsequent years. The Department of Energy, state governors, and consumer groups are seeking solutions to prevent even larger price hikes starting June 2028. Updates on this critical issue will follow.
• 2026/2027 PJM Base Residual Auction cleared at the cap: $329.17/MW-day
• 2027/2028  PJM Base Residual Auction cleared at the cap: $333.44/MW-day
• 2028/2029 Forecasted PJM Base Residual Auction Price: 483/MW-day to $785/MW-day

RD Energy: PJM Capacity interpretation (plain English):

• PJM capacity pricing at high levels indicates market concerns about meeting peak power demand during summer or winter. Solutions include reducing power demand, increasing generation supply, or implementing a price cap on PJM capacity. However, a price cap might hinder new generation development, suggesting demand reduction is also necessary.
• That is exactly why reducing your KW peak contribution number (PLC) and implementing Peak Load Management is so important and valuable in 2026–2028 and in the years to come. Reducing your KW peak usage will lower your annual power spend sometimes with astronomical effect.

Demand Response event risk: why extreme cold raises the probability

During the coldest hours, risk rises for a critical peak event because:

•  Power usage peaks (electric heating, industrial process loads, etc.)

• Gas  deliverability and natural gas supplies can tighten (natural gas well-head freeze-offs, natural gas pipeline constraints)
• Power Generators can face fuel/operational constraints (things break as the extreme weather continues)—raising the odds that PJM needs emergency a load reduction

This is why we keep saying: Demand Response isn’t just “income.” It’s a reliability tool—and extreme cold or extreme heat is when it matters most.  PJM’s primary goal is to keep the power on at critical high demand times.  No one wants a black out.

 What we expect as spring approaches and injection season begins

As winter fades, the market usually shifts from “weather panic” to “storage math.”

If end of season storage levels lands materially lower than the normal past 5 year average, we typically see:

• Higher  natural gas, and therefore, electric prices
• Increased price sensitivity related to:
  • Natural gas daily production
  • LNG export demand
  • Power burn in early heat waves – uses a lot of natural gas
  • Storage injection Pacing: Are weekly storage injections lowering or expanding the deficit

RD Energy Action Plan (next 30–90 days)

1. Confirm your 2026–2027 electric & natural gas procurement strategy.  Remember, a strategy is more than more contracting a new price as your current deal ends.
2. Quantify PJM capacity exposure and identify levers to reduce peak contribution, and thereby, reduce cost (Peak Load Management).  RD Energy has our own Capacity Impact Report to help identify potential savings.
3. Screen for Demand Response eligibility & income potential
4. Stress-test natural gas budget risk using forward curve ranges and storage  sensitivity.  RD Energy has a model that can help with that.

We can’t say it enough: If you fixed a long-term electric or natural gas price in 2024 or 2025, then excellent.  If you have contracts coming     up in the next 24 months, planning an overall energy procurement strategy should begin soon.