January 2025 Electric Spike
We rang in the new year with a harsh reminder that winter volatility is alive and well. The first week of January brought extreme cold to the Northeast, and with it, a sudden spike in wholesale electric prices.
Daily average wholesale electricity prices in NYISO Zone J (New York City) jumped above $0.20 per kWh on January 6–8, compared to December’s average of roughly $0.04 per kWh. This represents an increase of more than 400% in a matter of days.
While these prices are reflective of the wholesale market, they ultimately trickle down to customer bills in varying ways. Most properties with fixed-rate energy supply contracts will not experience any impact from this temporary volatility. However, those that purchase electricity on an indexed or variable-rate basis may see increased charges reflected in their January invoices.
Extreme cold snaps increase both heating and electricity demand, especially as electric heating systems, heat pumps, and resistance heaters work overtime. At the same time, power plants running on natural gas face increased fuel costs and delivery constraints as pipeline capacity becomes limited. These combined pressures create short-term spikes in wholesale pricing.
The good news is that such spikes are typically short-lived. By mid-January, milder temperatures returned, and wholesale prices fell back into the $0.04 to $0.05 per kWh range.
While weather remains the dominant driver of winter volatility, broader market conditions have been favorable. Natural gas inventories are strong, production remains steady, and overall fuel prices are far below the levels seen in prior winters.
Aurora Energy Advisors continues to monitor energy markets closely and works with clients to ensure supply contracts and risk management strategies are aligned with their operational needs and budget goals.
Market Analysis
Electricity
January opened with major price swings as severe cold drove NYISO Zone J daily settlements briefly above $0.20 per kWh, before returning to the $0.04–$0.05 range by mid-month. Despite the volatility, monthly averages remained reasonable compared to historic winter peaks.
Natural Gas
Natural gas futures hovered between $2.50 and $2.70 per MMBtu through January. Elevated short-term heating demand offset otherwise bearish fundamentals, with record production and above-average storage helping to contain price surges.
Crude Oil
Crude oil traded in the $72–$76 per barrel range in January, with global markets balancing geopolitical uncertainty and slowing economic growth indicators. OPEC+ production cuts continue to provide price support heading into Q1.
💡 Mitchell’s Tip: If your property purchases energy on an indexed rate, review your January bills carefully — short-term winter volatility can have outsized impacts.
