How Cheap Natural Gas for 2027 Impacts Your Electric Bill

Natural gas got cheaper through 2026, and most commercial electricity bills went up anyway. Gas sets the price of the electricity itself, and gas fuels nearly 40% of U.S. power generation. While gas prices may be low, capacity and transmission charges make up a growing cost of most businesses' energy bills, and they are rising fast enough to eat potential savings.

Here is what is happening in the gas market as of September 2026, and what it means for a 2027 budget.

Why is Natural Gas so Cheap Right Now?

Supply is running well ahead of demand. The Energy Information Administration forecasts dry gas production at 111.7 billion cubic feet per day in 2026, up from 107.6 in 2025, and climbing again to 115.9 in 2027. Storage has kept pace. The agency projects 3,969 billion cubic feet in underground storage on October 31, roughly 5% above the five-year average and the largest pre-winter cushion in years.

Storage matters because it is the buffer between a cold snap and a price spike. Going into winter with extra gas in the ground means the market has less to fear from one bad month. Prompt-month gas traded near $3 per million British thermal units in early September, below its five-year average, per EIA weekly data.

Why Did 2027 Get so Much Cheaper?

The weather forecast repriced it. In January, the Energy Information Administration projected Henry Hub natural gas would average $4.60 per million British thermal units in 2027. In its September 9 outlook, that forecast is $3.28, a drop of nearly 30% in eight months.

The driver is an unusually confident winter forecast. The NOAA Climate Prediction Center puts the odds of a very strong El Niño this winter above 90%, with a 69% chance that October through December registers the strongest three-month reading in records going back to 1950. A strong El Niño typically brings warmer, drier weather across the northern half of the country. Warmer northern winters mean less heating demand, and less heating demand means less gas burned. The market has priced that in.

Although the odds of an El Niño are high, forecasts can change. A milder-than-expected El Niño, or one cold January regardless, could make this opportunity a fleeting one.

Why Doesn't the Cheap Gas Extend Past 2027?

Because the weather signal runs out and the export demand does not. U.S. liquefied natural gas exports have gone from 15.1 billion cubic feet per day in 2025 to a forecast 17.4 in 2026 and 18.6 in 2027. 

Global disruption is adding to that pull. Shipping disruptions through the Strait of Hormuz, concentrated in Qatar, are increasing demand for cargoes sourced outside the strait. That is a structural bid on American gas that does not care what El Niño does. 

The forward market reflects it. Calendar 2028, 2029, and 2030 are trading roughly 10% to 12% above calendar 2027. 

So Why is my Electricity Bill Still Going Up?

Because gas is not the part that is growing. PJM, the grid operator for Pennsylvania, New Jersey, Maryland, and ten other states, saw total wholesale costs rise 50.3% in the first half of 2026. Capacity costs tripled, up 207.1% to $19.61 per megawatt-hour. Transmission added another $19.88.

Capacity is what a business pays for the right to draw power during the grid's highest-demand hours, separate from the electricity it actually uses. It is priced by auction, not by the gas market, and the auctions are responding to demand growth the gas market cannot offset. 

So a business can lock a lower commodity price for 2027 and still watch its all-in cost per megawatt-hour climb.

What Should you Watch Between Now and Winter?

Four things move this picture before any 2027 contract decision is final. The October 31 storage number, which confirms or breaks the cushion. The Climate Prediction Center's November update, which is the last read before heating season. The first sustained cold stretch, which tests how much of the El Niño discount is real. And the capacity auction results for the delivery years your contract actually covers.

Key Takeaway

Natural gas is genuinely cheap for 2027, driven by record production, a large storage cushion and a near-certain El Niño that should cut winter heating demand. That discount does not extend past 2027, because rising exports and global supply disruption keep structural demand high once the weather signal runs out. And cheap gas alone will not lower an electricity bill when capacity and transmission charges are rising faster than the commodity is falling.