The average U.S. residential electricity price is on course to reach 18.7 cents per kilowatt-hour in 2027, up from 17.3 cents in 2025, according to the Energy Information Administration’s latest forecast. The path runs through 18.2 cents in 2026. By simple arithmetic on those figures, the 2027 price is about 8% above the 2025 level, and the increase is spread over two years rather than arriving at once.
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The forecast is a national average, and prices in individual states and utility territories can sit well above or below it. The wholesale side of the market, which sets part of the bill, is far more uneven.
The October Short-Term Energy Outlook numbers
EIA released its October 2026 Short-Term Energy Outlook electricity section on October 6, with the forecast completed on October 1. It shows the U.S. average residential price at 17.3 cents per kilowatt-hour in 2025, 18.2 cents projected for 2026 and 18.7 cents projected for 2027. EIA notes that residential prices include expenses beyond wholesale power, such as transmission and distribution upgrades and, in some regions, capacity market auction prices.
The same release lists the next edition for November 10, 2026, according to EIA’s release schedule, so the 2027 figure is a snapshot that the agency will revise. The October edition is the Winter Fuels Outlook edition, and EIA expects homes that use electricity as their main heating source to spend slightly more this winter.
To put the cents in dollars, a household that uses 1,000 kilowatt-hours a month, a round figure chosen for illustration and not an EIA household average, would see the 1.4-cent rise between 2025 and 2027 add about $14 to a monthly bill. Homes that use more, particularly those that heat with electricity, would see a larger change, and the regional spread in wholesale prices means actual bills will not move in lockstep with the national average.
Wholesale prices and the PJM jump
At wholesale, the EIA outlook has prices at 11 tracked hubs averaging about $52 per megawatthour in 2026, roughly 11% above 2025, before easing to about $49 in 2027. EIA attributes the 2026 increase mainly to extreme weather, including winter storm Fern and high July temperatures, and to natural gas prices, which strongly influence wholesale and therefore residential prices. Most hubs have been fairly stable in 2026, so the average hides large regional differences.
The largest rise belongs to PJM, the grid operator that serves more than 67 million people across 13 states and the District of Columbia, where wholesale prices are forecast to rise about 41% in 2026 compared with 2025 and then fall about 7% in 2027. NYISO and ISO-NE are also among the highest-priced regions this year, with NYISO expected to fall about 14% in 2027. California’s CAISO moves the other way: prices there hit historic lows in 2026 and are forecast to rise about 19% to $30 per megawatthour in 2027, and the Northwest Mid-Columbia hub is down about 23% this year.
Capacity auctions and data-center demand
Capacity market prices help explain why a regional wholesale spike can carry into household bills later. In December 2025, PJM’s auction for the 2027/28 delivery year cleared at $333.44 per megawatt-day, the auction’s price cap and a record for the third straight auction, with PJM procuring about 6,625 megawatts less than its reserve-margin target. The grid operator’s demand forecast rose by 5,250 megawatts, almost entirely from data centers.
Stu Bresler, PJM’s executive vice president for market services and strategy, said the result “leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply,” in comments carried by Power Engineering. The demand picture in the EIA forecast points the same way: third-quarter 2026 consumption rose about 4% from a year earlier on hot weather, with residential use up about 6% and commercial about 5%. For 2027, EIA projects commercial demand, which includes data centers, to grow about 2.8% and industrial demand about 2.7%, while residential demand stays roughly flat.
The auction also left the region thin on supply margin. Power Engineering reported that procured capacity left a 14.8% reserve margin against a target near 20%, a shortfall of 6,623 megawatts by its count, and that PJM says this does not mean outages are certain. Only 774 megawatts of new generation and uprates cleared, according to Utility Dive, which is the supply side of the squeeze that the demand growth is testing.
Fuel and generation mix shape the rest of the outlook. EIA’s overview of the October forecast has natural gas supplying 40% of U.S. generation in 2026 and 39% in 2027, coal 16% and 15%, solar 8% and 9%, and nuclear holding at 18%, with wind reaching 12% in 2027. Households in regions with capacity-price pressure and rising commercial demand have the most reason to watch the November update.
This article was produced with the assistance of AI and reviewed by Morning Overview editors prior to publication.
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