New York’s Rising Energy Costs: Policy Constraints Harm Affordability and Reliability
New York sits next door to some of the most prolific natural gas production regions in the world, yet its residents pay some of the highest energy rates in the country.
This past winter, as demand surged, that disconnect was on full display. With the New York Independent System Operator forecasting even higher demand in the years ahead, the core problem is now impossible to ignore: New Yorkers are paying more because the state lacks sufficient infrastructure to deliver affordable, firm, reliable natural gas when it is needed most.
Recent policy decisions have not fully accounted for the Northeast’s energy realities. At the same time, aggressive electrification goals are increasing peak demand faster than supporting infrastructure can be built.
Governor Hochul’s “all of the above” approach is a step in the right direction, but the most immediate cause of this winter’s sharp price spikes is constraint. Limits on natural gas pipeline capacity have reduced the flow of low-cost supply into the state’s highest-demand regions, leaving consumers more exposed when demand rises.
Renewable energy is important today and will play a growing role in the future, However, renewables alone cannot reliably power the grid or heat homes across New York, not today, and not in 2050.
Across most of the United States, abundant domestic natural gas has kept prices relatively stable and affordable. New York is the outlier. By blocking new pipeline capacity into high-demand areas, the state has effectively cut itself off from low-cost supply, especially during peak winter periods. This has produced skyrocketing prices and, in some areas, has resulted in trucking compressed natural gas so that gas customers have access to supplies needed to heat their homes on the coldest days. Rather than acknowledge this, some pipeline opponents have tried to shift blame, arguing that natural gas itself causes high prices and that more renewables would solve the problem.
This winter showed the cost of those constraints. When gas and electricity demand reached record levels, pipeline capacity was nearly fully utilized, driving supply prices to some of the highest levels in the country—even though low-cost natural gas is produced just across the border in Pennsylvania. In January, wholesale electricity prices in New York were about twice the national average, helping push total winter energy costs to roughly $2.7 billion, or 50% more than the winter two years earlier. That gap was driven not by inherent volatility in natural gas markets, but by a constrained delivery system that blocked access to the lowest-cost supply.
Because natural gas generates roughly 90% of downstate electricity and about 50% upstate—and often sets wholesale power prices—supply constraints ripple across the entire energy system. This winter, both gas and electricity supply costs rose approximately 30% for customers.
Some now cite these high prices as a reason to accelerate the phase-out of natural gas. While New Yorkers broadly support reducing emissions, this approach ignores current realities around reliability, technology, and affordability. Until firm, dispatchable alternatives exist at scale, natural gas remains essential for keeping homes warm and the grid stable at a reasonable cost.
Blaming natural gas prices distracts from the real issue: insufficient delivery infrastructure. If policymakers are serious about affordability, they must address the bottlenecks directly. New York’s own State Energy Plan recognizes the enduring role of natural gas. The responsible path forward is an honest all-of-the-above strategy, one that invests in the infrastructure needed to reduce constraints, improves supply access, protects reliability, and keeps energy affordable for families and businesses.
Energy affordability is too important to get wrong. New York needs pragmatic solutions that match policy to physical and economic reality.
José Costa, President and CEO, Northeast Gas Association.
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