Electricity Prices to Remain Higher Than Natural Gas Through 2050

The Energy Information Administration (EIA) has released its updated Annual Energy Outlook (AEO), projecting that electricity prices will remain higher than natural gas through 2050. The 2026 AEO shows a widening cost gap between electricity and competing fuels, with the national average residential retail cost of electricity relative to natural gas staying within a range of around 3.3-3.5 times higher.

The EIA projects that both natural gas and electricity prices will rise modestly (~5%) through 2050. However, electricity costs are expected to increase across the board due to rising distribution and generation costs. By 2050, generation could account for 46% of electricity costs, followed by distribution at 35% and transmission at 19%.

The increased cost of electricity is driven by higher costs for electric generation and utility distribution. This may change over time if costs can be spread out across more average daily use. However, if peak demand remains high and off-peak use falls, fixed system costs will be spread across fewer kilowatt-hours, raising average prices.