The Market Is Sending Mixed Signals. Here's What to Do About It.

May 2026  •  GTI Energy Advisors

Gas is cheap. Power isn't.

If you are responsible for procuring energy for a commercial or industrial facility right now, that gap matters more than you might think.

Henry Hub spot prices are down year over year and the EIA is forecasting a full-year 2026 average around $3.76/MMBtu.¹ On paper, that sounds like good news. But electricity prices in the major power markets tell a different story.

Average PJM power prices in Q1 2026 were up 81% year over year. The capacity auction for the June 2026 to May 2027 delivery year cleared at $329.17/MW-day, the market cap, and every single Locational Deliverability Area hit the ceiling.² The fact that every LDA cleared at the cap is telling you the market is tight and the grid operator knows it. The cleared volume barely exceeded the reliability requirement by 139 MW — essentially no margin.³

ERCOT is on a similar trajectory with load growth expectations of 5–6% annually through 2030, driven largely by data centers and continued electrification.⁴ More load, not enough new dispatchable capacity to keep up with it.

If natural gas is cheap, why is power expensive?

The short answer is decoupling that has been happening over the past 5+ years but never as much as it is now. Low gas prices used to mean low power prices. That relationship is breaking down because demand is growing faster than the grid can absorb, regardless of fuel cost.

There is another variable buyers need to watch: LNG exports. Golden Pass LNG shipped its first cargo on April 22, adding about 0.7 Bcf/d of new export capacity to the U.S. market.⁶ Train 2 is expected to start up in the second half of 2026. More U.S. LNG export capacity means more competition for domestic gas supply, which puts a floor under Henry Hub prices over time even if near-term fundamentals stay loose.

The EIA is forecasting Henry Hub to average around $3.76/MMBtu for full-year 2026 and $3.85/MMBtu in 2027.¹ If LNG ramp-ups and summer cooling demand hit simultaneously, that number could move faster than the forward curve currently reflects.

What this means for buyers

If you're approaching a contract renewal in the next 12 months, the window for locking in a favorable gas contract is still open, but probably not for long. On the power side, you are managing capacity costs whether you like it or not, so the question is really about your index vs. fixed strategy and how much price risk you want to carry into a structurally tight market. GTI Energy Advisors has recommended installing backup generation for its customers for over 10 years, but now it is becoming more of a need than a want.

A few things worth doing right now:

1. Double check when your current contracts expire. If within 12 months, you should take a look at renewal pricing.
2. Gauge your company's interest in energy security with backup generation. GTI Energy Advisors has some no-capital options for installing generation that are absolutely amazing.
3. Make sure your consultant or broker is on top of this for you.

The market isn't broken. It is more complicated, and the old rules of thumb don't all apply anymore.

Questions about your current procurement strategy? Reach out to GTI Energy Advisors.