Commercial electricity buyers in Massachusetts and Rhode Island face a market in transition. The near-term forward curve reflects conditions that are relatively favorable compared to where prices were in 2022 and 2023 — but the structural drivers that have historically made New England electricity expensive haven’t gone away, and several factors point toward rising costs in the medium term.

This is what we’re watching at Gridwealth, and what it means for commercial procurement decisions right now.

Near-Term: A Window of Relative Stability

As of early 2026, New England wholesale electricity forward prices have moderated from their 2022 peaks. Milder-than-expected winters in 2023-2024 reduced winter demand stress, and natural gas supply has been more adequate than feared. The ISO-NE Forward Capacity Market (FCA 16) cleared at a historically low $3.58/kW-month for the 2026-2027 commitment period, reflecting excess capacity in the current grid environment.

For commercial buyers, the near-term message is: if you haven’t locked in supply rates for 2026-2028, you are in a relatively favorable environment to do so now. Forward prices are not at their lowest point in history, but they are well below the 2022-2023 spike period.

Medium-Term Risks: Why Prices Are Expected to Rise

• Capacity costs: Capacity market tightening. As older thermal generation retires and new resources face siting and permitting delays, future FCA auctions are expected to clear at higher prices than FCA 16. ISO-NE’s forward capacity adequacy assessments have flagged increasing tightness in the 2028-2030 timeframe.
• Transmission: Offshore wind integration costs. New England states have committed to significant offshore wind procurement. The transmission infrastructure needed to deliver that power to load centers carries capital costs that will flow through to electricity bills over the next decade.
• REC costs: RPS escalation. Massachusetts’ Class I REC requirement continues to increase annually, and REC prices are sensitive to supply constraints in the New England market. As the required percentage rises, compliance costs embedded in retail rates rise accordingly.
• Gas risk: Natural gas price volatility. Algonquin Citygate basis differentials remain structurally elevated relative to Henry Hub. Any significant cold winter will test the region’s gas supply adequacy and can produce electricity price spikes that fixed-rate buyers don’t face.

The CAR Phase 1 Transition

ISO-NE’s Capacity Auction Reform (CAR Phase 1) is moving the region from three-year-forward capacity auctions to prompt auctions closer to the delivery period. As this transition occurs, suppliers pricing multi-year fixed-rate products will have less certainty about future capacity costs — which may translate into wider uncertainty premiums in fixed-rate offers for 2027 and beyond.

Procurement Recommendation for 2026

Given the combination of current relative stability and medium-term upward pressure, the procurement case for locking in 12-24 month fixed-rate supply now is stronger than at any point since 2021. Commercial buyers who haven’t secured forward supply for 2026-2027 should work with their energy broker to obtain current quotes and compare them against their utility’s default service rate and the forward market outlook.

This is not investment advice — energy markets are inherently uncertain. But the current environment favors buyers who act on procurement rather than wait.

Contact Gridwealth Electric: Gridwealth Electric provides ongoing market intelligence to our broker partners. Contact us to discuss current market conditions: tford@gridwealth.com.