Lock In or Wait? How to Think About Energy Contract Timing Right Now

This is the question I get more than almost any other: is now a good time to lock in?

Honest answer: it depends on what market you're in and when your contract expires. But the conditions right now make it a more interesting question than usual, so let me walk through how I'm thinking about it.

Gas is cheap. Power isn't.

Natural gas is about as cheap as it's been in years. Henry Hub has been trading around $2.80–$3.00/MMBtu, and the EIA's full-year 2026 forecast sits at $3.60/MMBtu.¹ Look at the chart below. Outside of the 2022 price spike, we're basically back to where gas has historically traded.

CHART 1: Henry Hub Natural Gas

Now look at electricity. Commercial and industrial rates have been climbing steadily, and that trend is accelerating. ERCOT is forecasting a record summer peak above 92 gigawatts.² The North Hub is looking at roughly a 45% increase in wholesale prices for 2026, driven by summer demand spikes, data center load growth in the Dallas-Fort Worth area, and a grid that's adding customers faster than it's adding wires.³ The EIA projects load-weighted average wholesale electricity at around 5.1¢/kWh nationally, up over 8% from last year.⁴

CHART 2: C&I Electricity Prices

The underlying fuel is cheap. What you pay on your meter keeps going up. That gap is structural, not seasonal. Data centers are eating grid capacity. New transmission takes a decade to permit and build. This doesn't resolve itself quickly.

What does "locking in" actually mean?

A fixed-rate contract locks your energy commodity cost for the term, typically 12 to 36 months. You're betting the market moves higher during that period. The supplier takes the other side.

A variable or index contract floats with the market month to month. You benefit when prices drop and take the hit when they spike. In a stable or falling market, variable usually wins. In a rising or volatile market, fixed wins.

There's a middle path worth knowing about: a block-and-index structure. You fix a portion of your expected load at a locked rate and let the rest float. Fix 70% of your load at a negotiated rate and let the remaining 30% ride the index. You get budget certainty on most of your exposure without being fully locked out if prices soften.

So what should you do?

A few questions worth asking yourself:

1. When does your contract expire? If it's expiring this fall or winter, you should already be in the market. Waiting until 30 to 60 days out means you're shopping when suppliers know you have no leverage. The best outcomes I've seen come from buyers who start looking 12 to 18 months out, not people scrambling at the deadline.

2. What's your risk tolerance? If energy spend is a meaningful line item and budget variance is a problem, fixed makes sense even if you leave some upside on the table. Certainty has value. If your margins can absorb some volatility and you want market exposure, index can work, but you need to be actively watching it, not setting it and forgetting it.

3. Are you in ERCOT? If you're a Texas buyer, the summer peak risk is real this year. On-peak prices in July and August can spike hard. Forward contracts for summer on-peak months have been pricing at $110 to $165/MWh at some hubs.⁵ If you're on a variable rate right now, you're exposed to that. Worth knowing what you're sitting on before July gets here.

4. Don't chase the perfect price. The buyers who consistently get the best results aren't the ones who time the absolute low. They're the ones with a disciplined process, a competitive bid, and enough runway to negotiate. Waiting for the bottom usually just means running out of time.

What I'm seeing right now

Suppliers have appetite for 24 to 36 month terms right now. The forward curve for late 2026 into 2027 reflects the capacity and demand pressures building in the market. That doesn't mean rates will definitely rise, forecasts are forecasts, but the structural direction isn't pointing in buyers' favor if they wait.

If you've got a contract expiring in the next 12 months and you're not actively looking at your options, this is a reasonable time to start. Not because I'm trying to drum up urgency. Because the process takes longer than most people expect, and starting now means you have choices. Starting at the deadline means you don't.

If you want a straight read on where you stand, fill out the form below. No pitch, no pressure.

FOOTNOTES

Sources

1. U.S. Energy Information Administration, Short-Term Energy Outlook, June 2026. Henry Hub full-year 2026 average forecast $3.60/MMBtu. ↩
2. ERCOT, via CultureMap Houston, "ERCOT braces for record-breaking power demand across Texas this summer", 2026. Peak forecast above 92.2 GW. ↩
3. ComparePower, Texas Electricity Prices Forecast 2026. ERCOT North Hub wholesale prices forecast up ~45% in 2026. ↩
4. U.S. Energy Information Administration, Summer 2026 Electricity Outlook. Load-weighted average wholesale electricity price $51/MWh (~5.1¢/kWh), up 8.5% from 2025. ↩
5. The Merit Order, "ERCOT power prices test summer highs amid record demand, tight supply", 2026. Summer on-peak forward contracts at some ERCOT hubs pricing $110–$165/MWh. ↩