At the end of January, the New York Independent System Operator (NYISO) released a new white paper outlining the key forces driving recent increases in wholesale electricity prices across the state. For local governments, schools, and public entities, the report provides clear context for the current price trends and helps explain the broader market conditions shaping energy costs.
According to NYISO, the primary driver of electricity price volatility is natural gas. Roughly half of New York’s electricity is produced using natural gas, meaning wholesale electricity prices closely track gas‑market trends. When natural gas prices surged between 2021 and 2022, partly due to global market disruption following the Russia‑Ukraine conflict, New York’s wholesale electricity prices rose from a record low of $25.70/MWh in 2020 to $89.23/MWh in 2022. Even as prices eased somewhat after 2022, NYISO notes that tight supplies and lingering pressure points have kept both natural gas and electricity prices elevated, with gas prices in 2025 averaging 120% higher than in 2024.
The paper also explains that national and global factors now play a much bigger role in U.S. natural gas prices. One major shift is the growth of liquefied natural gas (LNG) exports. The United States is exporting more natural gas than ever before, which connects domestic prices more directly to global energy markets. That means gas prices, and therefore electricity prices, are more sensitive to world events than they used to be. This growing link to global markets is one reason NYISO expects continued upward pressure on natural gas and electricity prices in the coming years.
Another key factor is the state of New York’s power plants. Since 2019, New York has retired about 4,315 MW of generating capacity while adding only 2,274 MW. In addition, many new energy projects have been delayed, meaning the system must rely heavily on older and less efficient units that are costly to operate. NYISO warns that this combination of rising fuel costs, delayed project timelines, and increasing demand from data centers, industrial loads, and electrification will continue to strain the grid and contribute to higher prices in the coming years.
For MEGA members, the white paper reinforces that today’s energy prices are shaped by a mix of local, national, and global factors. While no one can control (or predict with certainty) natural gas markets or project development timelines, understanding these trends can help municipalities and public entities make more informed decisions, anticipate budget impacts, and better plan for the future, particularly as the market and our grid continue to evolve.
If you have questions about how these trends may affect your community, MEGA is here to help you evaluate your options and make proactive decisions.
