Why Lower Summer Power Prices May Not Mean Lower Electric Bills
Wholesale electricity prices are forecast to fall across much of the United States this summer, but that does not guarantee lower electric bills for households. What families pay will also depend on residential retail rates, delivery and other utility costs, and how much electricity they use to keep homes cool.
The U.S. Energy Information Administration released its July 2026 Short-Term Energy Outlook on July 7, using a forecast completed July 1. EIA forecasts the U.S. wholesale electricity price at an average of about $45 per megawatthour during summer 2026, down $4 per megawatthour, or roughly 8%, from summer 2025.
The $45 figure is a load-weighted composite forecast based on wholesale hubs tracked by EIA. It is not a residential rate and does not represent what every household will pay. The forecast is also a monthly average: EIA warns that heat waves can cause temporary wholesale price spikes. The agency’s next scheduled outlook is due August 11, 2026.
Why wholesale prices are expected to decline
EIA attributes the expected decline largely to lower natural-gas costs delivered to power plants, particularly in the West. It also points to increased generation from several sources, including hydropower, solar, wind and nuclear power.
The forecast varies sharply by region. EIA forecasts wholesale prices at the Northwest Mid-Columbia hub to fall 46%, from an average of $50 per megawatthour in summer 2025 to about $27 this summer. California prices are forecast to decline 30% to $23 per megawatthour, while Southwest prices are projected to fall 27% to $28. In the Midcontinent Independent System Operator, or MISO, prices are forecast to decline 18%, from $56 to $46 per megawatthour.
EIA’s forecast is not uniformly lower. Wholesale prices in the PJM and ISO New England markets are expected to average about $69 and $64 per megawatthour, respectively, slightly higher than last summer.
Why the wholesale forecast may not reach households
Wholesale electricity is bought and sold on power markets before it is delivered to homes and businesses. A residential bill reflects a broader set of costs. EIA says electricity prices generally account for power-plant expenses as well as the cost to build, operate and maintain transmission and distribution systems. Regulations and local utility structures also affect how costs reach customers.
In some states, utility commissions regulate most retail prices. In others, generation may be exposed to competitive markets while transmission and distribution remain regulated. Utilities may also recover infrastructure, maintenance and other approved expenses separately from the wholesale cost of power.
For scale, EIA reports that the U.S. average residential retail electricity price was 17.3 cents per kilowatthour in 2025 and forecasts an average of 18.3 cents in 2026. Those retail figures are measured in cents per kilowatthour, while the wholesale forecast is measured in dollars per megawatthour; they describe different parts of the electricity system and should not be compared as if they were the same rate.
Usage can matter as much as the rate
The other major variable is consumption. A household that runs its air conditioner more often during a heat wave can use substantially more kilowatthours, even if wholesale prices are lower on average.
EIA says extreme temperatures can increase demand for cooling and heating, while higher demand can push fuel and electricity prices upward. Most residential customers pay rates based on seasonal averages rather than minute-by-minute wholesale prices, although some utilities offer time-of-day pricing.
That creates two separate ways for a summer bill to rise: the retail price per kilowatthour may be higher, and the household may use more kilowatthours. A lower wholesale average does not automatically offset either change.
A separate projection points to higher summer spending
A June report from the National Energy Assistance Directors Association and the Center for Energy Poverty and Climate projects average summer residential electricity expenditures of approximately $792 in 2026, up from $717 in 2025. That is a projected increase of 10.5%.
The estimate is a projection, not a final national total, and it does not mean every household will pay more. NEADA and the Center for Energy Poverty and Climate say regional costs vary with climate, electricity prices and baseline cooling demand. Their projection illustrates how higher retail prices and greater air-conditioning use can outweigh lower wholesale prices in a household’s total summer spending.
What households can do now
Households facing high energy costs can check whether they qualify for the Low Income Home Energy Assistance Program through federal and state channels. The Department of Energy also directs consumers to weatherization assistance, home energy assessments and efficiency upgrades through its Home Upgrades and Energy Savings resources.
Eligibility and available services vary by state and household circumstances. An assessment may help identify insulation, air-sealing, heating or cooling improvements that could reduce future electricity use, but assistance and savings are not guaranteed for every household.
What to watch next
The key indicators over the next several weeks will be actual summer temperatures, regional grid conditions, utility rate developments and EIA’s August 11 outlook. The central distinction remains simple: wholesale prices measure the market cost of electricity, while household bills reflect the retail rate and how much electricity each home consumes.
Sources
- U.S. Energy Information Administration’s July 2026 Short-Term Energy Outlook
- NEADA and Center for Energy Poverty and Climate cooling outlook
- U.S. Department of Energy Home Upgrades resources
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