December 09, 2025
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The MPSC’s Winter Energy Appraisal for 2025-2026 forecasts rising demand for electricity and natural gas and also shows sufficient supply to meet this growing demand.
The annual winter energy appraisal released today projects that natural gas use will increase 3.3%, pushed up by a 14.4% increase in commercial sector demand, 13.9% in the residential sector, and 12.1% in the industrial sector. Natural gas used to power electric generation, however, is expected to decline 10.8%.
Electricity demand is expected to grow 2.9% for 2025, with the largest gains anticipated in the residential sector (5.8%). The commercial sector also is projected to increase 3.2%, while the industrial sector is expected to decrease 0.6%.
Among other highlights of the MPSC’s energy appraisal:
Here is the outlook by category of fuel:
NATURAL GAS
Demand: Total natural gas sales are expected to rise 3.3% in 2025 to 1.05 trillion cubic feet (Tcf), assuming normal winter weather. Power generation gas usage, which had increased for three years, is now projected to decline 10.8% in 2025, in contrast to growth in the residential, commercial and industrial sectors. Natural gas is used to heat about 77% of Michigan homes.
Supply: Michigan gas storage levels are expected to be 480 billion cubic feet (Bcf) to end 2025, 6.3% lower year over year. U.S. inventories were 3,960 Bcf as of Nov. 7, 0.7% higher than in 2024. Michigan has 10% of the nation’s available underground natural gas storage capacity, more than any other U.S. state.
Cost: The projected weighted average commodity price for residential customers of regulated Michigan utilities this season is $3.53 per Mcf, 12% more than last year’s actual average of $3.15/Mcf.
PROPANE
Demand: About 8% of Michigan households use propane for home heating, and the state uses more propane for residential heating than any other state. Demand is expected to be steady, as current federal weather forecasts call for near normal temperatures this winter heating season, and weather is the chief determinant of demand.
Supply: U.S. propane production remains high. U.S. inventories are at 66.57 million barrels, 1.3% higher than in 2024. Midwest inventories were at 20.5 million barrels, down 1.09 million barrels from 2024.
Price: For the week of Nov. 25, 2025, the average residential propane price in Michigan was around $2.17 per gallon. The EIA reported that wholesale propane prices began the season at 82 cents per gallon, 11 cents lower than in 2024.
ELECTRICITY
Demand: Michigan’s total electric sales for 2025 are projected to increase 2.9% to 100.46 terawatt-hours (TWh) compared to 98.8 TWh in 2024. Sales are expected to increase in the residential and commercial sectors while decreasing in the industrial sector.
Supply: No supply shortages are expected by the independent system operators serving the state, and Michigan’s capacity demonstration process also showed sufficient supply.
Prices: The EIA forecasts residential retail electricity prices in the east north central U.S. to average 17.57 cents per kWh for 2025, up 6.3% from the prior year. In Michigan, as in other states, prices vary by utility.
MOTOR GASOLINE
Demand: Sales in Michigan are expected to decrease 0.7% in 2025, following a 1.6% rise in 2024.
Supply: As of Nov. 7, the Midwest held 43.6 million barrels of gasoline inventories, about 700,000 barrels less than a year ago. Nationally, gasoline inventories are 0.9% lower than last year and near the middle of the five-year range for this time of year.
Prices: A gallon of regular unleaded gasoline in Michigan on Nov. 19 averaged $3.15 compared to $3.10 the year before. Midwest retail regular grade gasoline prices are expected to average $2.96 per gallon for 2025 and $2.65 per gallon in 2026.
DISTILLATE FUELS
Demand: Use of distillates for home heating continues to decline in Michigan, currently estimated at 35,680 homes compared to nearly 77,000 in 2010.
Supply: Midwest distillate stocks as of Nov. 7, 2025, were at 23.6 million barrels, 2.7 million barrels lower year over year. National inventories were at 110 million barrels, 4.9 million barrels lower than in 2024.
Prices: On-highway diesel fuel is expected to average $3.67 per gallon for 2025, 9 cents per gallon lower than in 2024, and continue to decline in 2026. AAA Michigan found the average diesel price in Michigan at $3.95 per gallon on Nov. 18, 31 cents higher than the year before. The average cost of heating oil was $3.36 per gallon as of Nov. 19, 25 cents per gallon higher than the same time last year.
Read the full Michigan Winter Energy Appraisal.
Households struggling with home energy costs are encouraged to reach out for help. Learn more about financial assistance and other available resources at michigan.gov/mpsc/gethelp, the MPSC’s webpage with information and links to state and utility company programs that offer energy bill assistance to income-qualified households, including State Emergency Relief, the Michigan Energy Assistance Program, and the annual Home Heating Credit.
The web page includes links to contact info for all of the natural gas and electric utilities whose rates are regulated by the MPSC; many utilities offer payment programs, including those that help spread seasonal higher costs year-round. The page also has information on home weatherization and other ways to help lower energy use.
For information about the MPSC, visit, sign up for its monthly newsletter or other listservs. Follow the MPSC on Facebook, X/Twitter, LinkedIn or Instagram.
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