U.S. Electricity Prices Climb to Record 18.07 Cents as Gas Costs Fuel Grid Strain

Americans Paying Record Electricity Prices as Gas Costs Climb

Electricity prices in the United States hit a new record in September 2025, with the average retail price rising to 18.07 cents per kilowatt-hour, up 7.4% from the prior month. The surge, the largest in almost two years, reflects broader trends in energy markets, including rising natural gas prices and increased electricity demand from data centers and industrial users. Analysts warn that prices are expected to climb further in 2026, adding to the financial strain on households and businesses already grappling with inflationary pressures.

Natural gas, the largest source of electricity generation in the U.S., saw its prices rise by 30% year-on-year in September 2025, contributing significantly to the increase in electricity costs. The EIA also reported that natural gas storage levels for the week ended November 22, 2025, dropped by 11 billion cubic feet-less than the 5 Bcf decline forecasted, suggesting strong demand for the fuel. This data underscores the tightness in the natural gas market, which is expected to persist as winter heating demands peak.

The surge in energy costs has prompted new infrastructure projects to bolster grid resilience and supply. In Houston, NRG Energy has announced plans to build a $617 million, 455-megawatt natural gas power plant set to begin operations in 2028. The project, which received a $370 million loan from the Public Utility Commission of Texas, will supply power to the Electric Reliability Council of Texas (ERCOT) grid. The plant is expected to create local jobs and strengthen grid reliability in one of the nation's largest energy markets.

Market Trends and Investor Reactions

Natural gas storage levels are a key indicator for both U.S. and Canadian energy markets, with fluctuations in inventories influencing fuel prices and investor sentiment. While the smaller-than-expected drawdown in storage levels is seen as a bullish signal for natural gas prices, the decline was less severe than the 14 Bcf reduction the week prior. This suggests that while demand remains robust, it may be tapering slightly. Analysts say the mixed signals highlight the need for careful interpretation of market data and a broader view of demand and supply dynamics.

Investor interest in energy infrastructure is also on the rise. In Texas, NRG Energy's new plant is one of several projects backed by the Texas Energy Fund, a program designed to support dispatchable power generation in ERCOT's service area. Meanwhile, Shell is expanding its investments in Kazakhstan's energy sector, aiming to collaborate on new oil and gas projects and leverage its technological expertise to boost production. These developments indicate a growing global focus on securing energy supply chains as demand increases and energy prices remain volatile.

Looking Ahead: Prices, Projects, and Policy

The surge in electricity and natural gas prices has drawn attention from policymakers and utility companies alike. In New York, a post-meeting press conference between Donald Trump and New York City's mayor-elect, Eric Adams, saw both leaders call for Con Edison to reduce its electricity rates amid rising affordability concerns. The utility has already scaled back a planned rate hike from 11.4% to 2.8% in response to political pressure.

Meanwhile, in India's Uttar Pradesh, the electricity commission has maintained power tariffs for the sixth consecutive year, a decision that reflects ongoing efforts to shield consumers from rising energy costs. The move has been praised as a step to protect affordability, though distribution losses and grid efficiency remain areas of concern for state regulators.

As energy prices climb and demand surges, the focus remains on infrastructure expansion, market stability, and affordability. With projects like NRG's new power plant and Shell's investments in Kazakhstan moving forward, the energy landscape is evolving rapidly. For now, consumers are left to navigate the rising costs, while investors and policymakers watch closely for the next shift in the market.

Sources

- NRG Energy to build 455-megawatt natural gas power plant in Houston https://communityimpact.com/houston/new-caney-porter/environment/2025/11/25/nrg-energy-to-build-455-megawatt-natural-gas-power-plant-in-houston/

- PRESSR: ADNOC Gas and EMSTEEL Sign $4bln, 20-year natural gas supply agreement to power UAE's industrial growth

- Natural gas storage dips, but less than forecasted, signaling mixed market signals https://www.investing.com/news/economic-indicators/natural-gas-storage-dips-but-less-than-forecasted-signaling-mixed-market-signals-93CH-4380143

- Shell looks to expand investment in Kazakhstan's energy sector https://www.trend.az/casia/kazakhstan/4122495.html

- Americans Paying Record Electricity Prices as Gas Costs Climb https://www.bloomberg.com/news/articles/2025-11-26/americans-paying-record-electricity-prices-as-gas-costs-climb

- Trump-Mamdani Meeting: Con-Ed Stock Drops; Affordability Was the Big Topic https://www.barrons.com/livecoverage/trump-policy-markets-today

- UP electricity commission keeps tariffs unchanged for 6th consecutive year https://www.business-standard.com/india-news/up-electricity-commission-keeps-tariffs-unchanged-for-6th-consecutive-year-125112300001_1.html