Natural Gas Prices Stay Moderate Into Summer 2026 — What It Means for Your Texas Electricity Rate
First published on July 6, 2026 · Last updated September 26, 2026
Quick Summary: Natural gas is the fuel that sets the ERCOT wholesale power price most hours of the year. The U.S. Energy Information Administration (EIA) expects Henry Hub gas to average about $3.44 per MMBtu across 2026 — moderate and roughly flat versus recent years — though prices firmed to an eight-week high in early September (see the update below). That steadier fuel backdrop helps keep competitive Texas fixed-rate offers affordable, but it does not automatically lower your bill: which plan is cheapest still depends on your usage.
Update — September 26, 2026: The summer bill is in. The EIA reported on September 25 that the Henry Hub benchmark averaged about $2.93 per MMBtu across June–August 2026 — roughly 6% below the same months in 2025 (about $3.11) — even though Texas and much of the country saw record-hot weather. Fast-growing solar and battery output absorbed much of the extra demand, so gas-fired plants (and the fuel bill behind them) were leaned on less than a summer that hot would normally require. Storage is comfortable too: the EIA expects inventories to end October near 3,985 Bcf, about 5% above the five-year average, which caps how far winter prices can run absent an extreme cold snap. For a Texas shopper, that confirms the fuel backdrop behind today's fixed-rate offers is soft rather than tightening — reinforcing the case to lock a competitive fixed rate during the fall shopping window rather than gamble on a bigger drop the outlook does not promise.
Update — early September 2026: Gas is no longer at its summer lows. The U.S. Henry Hub benchmark climbed to about $2.98 per MMBtu in early September, its highest in roughly eight weeks, as lingering Texas and central-U.S. heat kept gas-fired power demand elevated and LNG export feedgas rebounded, with Cheniere's Corpus Christi plant and Freeport LNG in Texas returning toward full operations after maintenance. Record U.S. production and unusually high storage are keeping the increase modest. In its August 2026 Short-Term Energy Outlook, the EIA actually lowered its Henry Hub forecast to an average of about $3.44 per MMBtu for 2026 (down from $3.67 the month before) and expects prices to stay below $3.00 until November, then firm toward roughly $3.62 in the first quarter of 2027 as winter heating demand builds. The read for shoppers is unchanged but more time-sensitive: fuel costs are steady-to-slightly-firming heading into winter, so the favorable fall shopping window is a reason to lock a competitive fixed rate now rather than wait for a bigger drop that the outlook does not promise.
Why Natural Gas Prices Drive Your Texas Electricity Rate
Texas gets a large share of its electricity from natural gas, and gas plants are usually the marginal generators on the ERCOT grid — the last units dispatched to meet demand in any given hour. Because the marginal generator typically sets the wholesale clearing price, the cost of natural gas often determines what electricity costs on the wholesale market that hour. Nationally, the EIA reports natural gas has supplied roughly 40% of U.S. electricity generation in recent years.
That link is why fuel prices matter to a household shopping for a plan. Retail providers (REPs) buy power and hedge future costs in the wholesale market, then bundle that into the fixed rate they advertise. When gas is cheap and stable, the fuel piece of those offers is lower and steadier. When gas spikes — as it did during Winter Storm Uri in February 2021 — wholesale prices spike too, and that pressure eventually shows up in new fixed-rate offers.
The good news for shoppers this summer: gas is not spiking. It is sitting in a moderate range and, by the EIA's own outlook, is expected to stay there.
Natural Gas Snapshot — EIA Outlook (September 2026)
- ● Henry Hub, summer 2026 avg (Jun–Aug): ~$2.93/MMBtu (~6% below summer 2025)
- ● Henry Hub spot, early Sept. 2026: ~$2.98/MMBtu (about an 8-week high)
- ● EIA forecast, full-year 2026 average: ~$3.44/MMBtu
- ● EIA forecast, Q1 2027 (winter): ~$3.62/MMBtu
- ● 2025 annual average: $3.53/MMBtu
- ● Gas share of U.S. power generation: ~40%
- ● Best hedge for shoppers: Competitive fixed rate
Sources: U.S. Energy Information Administration, August 2026 Short-Term Energy Outlook (forecast figures) and its September 25, 2026 Today in Energy review of summer 2026 Henry Hub prices (settled summer average and storage outlook); market reporting on the early-September Henry Hub spot move. Prices are Henry Hub spot/period averages; forecasts are EIA projections and can change.
What the EIA Expects for Gas Prices in 2026
In its August 2026 Short-Term Energy Outlook, the EIA lowered its Henry Hub forecast, now expecting the spot price to average about $3.44 per MMBtu across 2026 (down from $3.67 in its July outlook) and about $3.31 in 2027. The agency expects prices to stay below $3.00 per MMBtu until November and then rise seasonally toward roughly $3.62 in the first quarter of 2027 as winter heating demand builds. By early September, the spot price had ticked up to about $2.98 — an eight-week high — on lingering Texas heat and a rebound in LNG export demand.
Crucially, the EIA has been lowering, not raising, its price expectations: it now forecasts more gas held in storage than it did earlier in the year, because it raised its forecast for U.S. gas production. With supply growth outpacing demand, inventories are expected to stay above the five-year average — which limits upward pressure on prices even as summer heat pushes demand higher.
For context, gas averaged $3.53 per MMBtu across 2025, so the projected path for 2026 and 2027 is essentially sideways. Barring an extreme weather event, the EIA's outlook is one of moderate, stable fuel costs — the opposite of a price shock.
What Moderate Gas Prices Mean for Your Plan Choice
Stable fuel costs are exactly the backdrop in which a fixed-rate plan makes the most sense. A fixed rate locks in today's price for the length of your contract, so if a heat wave sends wholesale prices soaring on a hot August evening, your rate does not move. Variable and indexed plans, by contrast, can float upward during those same peak-demand hours.
| Situation this summer | What it means for you |
|---|---|
| Gas prices moderate & flat (EIA) | Fixed-rate offers are competitive right now |
| Peak-summer heat waves ahead | A locked fixed rate shields you from wholesale spikes |
| Variable / indexed plan | Can rise during the hottest, highest-demand hours |
| Contract nearing its end date | Shop early — expiring plans often roll to a pricier month-to-month rate |
If your current contract is set to expire during the summer, this is a reasonable window to compare fixed-rate offers rather than let it lapse into a default variable rate. See our guide to Texas electricity plan types for how fixed, variable, and indexed plans differ.
Moderate Fuel Costs Don't Automatically Mean a Low Bill
Here is the honest caveat. Cheaper gas removes one source of upward pressure on rates — but it does not, by itself, make your bill low. Two things still decide what you actually pay:
- Delivery charges are separate. Your bill also includes regulated TDU delivery charges (Oncor, CenterPoint, AEP Texas, or TNMP). These are identical for every provider in your area and are not affected by gas prices — so they never change which plan is cheapest for you.
- The advertised rate is not your real rate. Providers optimize the headline "1,000 kWh" price for marketing. Your true cost depends on your usage — this is the 1,000 kWh illusion. A plan that looks cheapest at 1,000 kWh can be a poor deal at 600 or 2,000 kWh.
That's why a favorable fuel backdrop is a reason to shop — not a reason to grab the first "low rate" you see. The way to capture the benefit is to compare offers at your real usage and look at the true effective rate, not the advertised teaser.
Worked takeaway: Suppose two Houston plans both advertise about 14¢/kWh at 1,000 kWh. If your home actually uses 1,800 kWh on a hot July, the plan with a bill-credit gimmick tuned to 1,000 kWh can cost you noticeably more per kWh than a plain fixed plan. Moderate gas prices set the stage; your usage decides the winner. Run your own numbers with the True Cost Calculator.
Related Texas Electricity Resources
Texas Electricity Plan Types Explained
Fixed, variable, and indexed plans — how they respond differently when wholesale prices move.
The Texas Electricity Generation Mix
How much of ERCOT's power comes from gas, wind, solar, nuclear, and coal — and why it matters.
The 1,000 kWh Illusion
Why the advertised rate can mislead you, and how to find the plan that's cheapest at your usage.
Texas Electricity Bill Estimator
Estimate your monthly electricity cost based on your home size and summer usage.
Lock In a Competitive Fixed Rate While Fuel Costs Are Steady
Moderate natural gas prices help keep Texas fixed-rate offers competitive — but the cheapest plan still depends on your usage. Compare plans at your real kWh and see your true effective rate.
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