FERC projects increased electricity demand, prices in summer 2025 assessment

The Midcontinent ISO, Electric Reliability Council of Texas Inc., Southwest Power Pool and parts of New England are the regions most at risk of generation shortages during high-demand periods this summer, the Federal Energy Regulatory Commission said in its Summer 2025 assessment report.

The report, released at the commission's May 15 open meeting, said a combination of higher-than-usual electricity demand, generator retirements and periods of low wind and solar output exacerbate reliability risks for the regions during the summer months.

FERC staff predicted that wholesale electricity prices would be "noticeably higher" this summer compared to 2024, driven primarily by an increase in demand and a decrease in generation resources. The report also noted that extreme weather events and aging infrastructure posed risks to the grid.

"We are losing dispatchable generation at a pace that is not sustainable, and we are not adding sufficient equivalent generation capacity," FERC Chairman Mark Christie said. "Today's assessment brings that point home."

Staff projected that all regions would have "adequate generating resources to meet expected demand and operating reserve requirements under normal operating conditions," according to the report.

But staff also projected higher-than-average summer temperatures throughout the US, with an increased likelihood of extreme weather events.

Commissioner Judy Chang said that more frequent extreme weather events were happening with more "certainty" and grid operators need to adequately prepare for them.

"We keep using the words 'uncertainty' and 'increased uncertainty' in these reports. I would say there's actually an increase of certainty that this is actually the pattern that we're seeing more and more," Chang said. "We're really walking into some potential risks this summer."

Natural gas demand

The report also noted that the US Energy Information Administration has projected US natural gas demand to be 98.7 Bcf/d for summer 2025, about 9.7% more than the previous five-year summer average. The EIA also projected natural dry gas production would increase by 1.9% from summer 2024 to 104.9 Bcf/d in summer 2025.

"Consistent with previous summers, the increase in overall natural gas demand for summer 2025 is expected to primarily come from net natural gas exports, which are expected to average 15.5 [Bcf/d] in summer 2025, up 3.2 [Bcf/d] from summer 2024 and a 51% increase above the previous five-year average," the report said.

FERC staff projected the price for natural gas would increase in summer 2025 at all US trading hubs.

The report said the price increases could be driven by record demand earlier in the year that led to significant storage inventory withdrawals in the first two months of 2025. Staff suggested that SoCal Gas Citygate could see one of the largest increases, with average futures prices nearly doubling from summer 2024 to $4.53/MMBtu.

Other reports

The FERC assessment comes one day after the North American Electric Reliability Corp. released its annual summer reliability assessment. In its assessment, NERC said peak electricity demand had grown by over 10 GW, more than double the increase from the previous summer. NERC also said 7.4 GW of generator capacity would be absent in summer 2025 because of plants that were retired or will be inactive during the summer months.

NERC identified MISO, ERCOT, SPP, and ISO New England as having elevated reliability risks for the upcoming season. The report specified possible generator outages in New England, power plant retirements in MISO, and reliance on renewables in SPP.

During the FERC meeting, Christie also expressed concern over reports from PJM Interconnection LLC that the grid operator was projecting a higher risk of needing to use emergency procedures to meet load and reserve requirements during peak summer periods.

"They're not going to meet load with actually enough generating resources, but by asking people not to use electricity, which I don't think PJM's ever said that before," Christie said. "I keep saying the arithmetic doesn't work, and it really is not working in PJM. We're losing resources, but at the same time, load is going up."