Cold Weather Impacts on Heating, Electricity, and LL97
Every few years, New Yorkers suffer through an extended stretch of frigid temperatures during the colder months. In winter 2025-2026, that reality arrived early around mid-November and will last through at least year-end. Cold weather this time of year won’t just mess with your holiday plans. It will also give your utility bills something to complain about. Let’s discuss why.
Heating fuel usage is directly driven by outdoor temperatures. The colder it gets, the harder your heating system has to work to keep buildings warm and comfortable. As runtime increases, so does fuel consumption and cost. In New York City, from November 11 through December 28 (date of this writing), the average high temperature was 44 degrees, approximately 5 degrees colder than historical norms and 3–6 degrees colder than the same period in each of the past three years. As a result, usage and cost are not only higher than in earlier months due to the seasonal shift into winter, but also higher than in prior years for this same timeframe.
Cold weather doesn’t just affect heating costs. It can also drive up electric bills, even in buildings that do not rely on electricity for heat. This is because the electric and natural gas markets are closely linked. While New York continues to transition toward a cleaner power grid, roughly half of the state’s electricity is still produced using fossil fuels, with natural gas playing a dominant role.
During periods of extreme cold, demand for natural gas surges as customers consume more fuel to heat their buildings. At the same time, power generators require that same gas supply to produce enough electricity to support homes, offices, industrial activity, etc. Compounding the issue, freezing conditions can hinder natural gas production. The combination of higher demand and constrained supply places significant upward pressure on prices. As natural gas becomes more expensive or less available, power plants are forced to rely on higher-cost alternative fuels to meet electricity demand.
The impact shows up quickly in wholesale power prices. Over the past five years, NYISO Zone J (New York’s wholesale power market) has averaged approximately 5.5 cents per kWh annually, with winter prices closer to 6.5 cents. By contrast, during the first two weeks of December this year, Zone J prices averaged 14 cents per kWh, with daily averages reaching as high as 18 cents. The result is a materially higher electric supply rate and, ultimately, a pricier electric bill. Thankfully, the back half of the month saw more mild temperatures which pulled the December NYISO average down to 11 cents.
Last but not least, it is always important to consider the impact on Local Law 97. LL97 emissions calculations are not weather-adjusted. If fuel consumption rises due to a cold winter, emissions increase, along with the likelihood of exceeding an emissions limit and facing penalties. While very few buildings are over their limits for the 2024–2029 period based on 2024 energy data, that could change when 2025 data is reported. Don’t forget that January and February 2025 were also freezing. Let this serve as a reminder to buildings that are under but close to their emissions limits that energy efficiency work is still highly recommended in case of uncontrollable and unforeseen circumstances.
Contact your Aurora account executive for more information on your building’s LL97 outlook and what efficiency upgrade options are available for your building.
Market Analysis
Natural Gas
NYMEX prices extended their rapid climb into December, with the prompt month reaching intraday highs near $5.50/MMBtu during the first week, the highest level since December 2022. As mid-month temperatures and forecasts moderated, prices reversed just as quickly, pressured further by profit-taking. The prompt month ultimately settled in the mid-$4 range heading into the new year.
Electricity
To summarize the topic of this newsletter, freezing temperatures cause natural gas supply to decline and demand to spike. As natural gas is the primary input to power generation in New York, NYISO Zone J ballooned to average $0.11 per kWh month-to-date, peaking at a daily average of $0.18. Expect more volatility as we progress through the winter months.
Crude Oil
Crude oil traced a U-shaped path in December, starting and ending the month in the high-$50 range with a mid-month dip. Volatility was largely driven by political developments surrounding peace talks in Ukraine, while investors also weighed evolving supply outlooks for 2026 as new production data was released.
💡 Mitchell’s Tip: Reduce consumption through energy efficiency projects.