Michigan’s energy landscape is undergoing significant change. According to the Michigan Public Service Commission’s (MPSC) Winter Energy Appraisal for 2025–2026, demand for both electricity and natural gas is expected to rise, adding pressure to infrastructure, pricing, and long-term planning across residential, commercial, and industrial sectors.
Growing Demand, Adequate Supply
The MPSC projects electricity demand to increase 2.9% in 2025, reaching approximately 100.46 terawatt-hours, up from 98.8 TWh in 2024. Residential demand leads the increase at 5.8%, followed by commercial growth of 3.2%, while industrial demand is expected to dip slightly by 0.6%.
Natural gas usage is also forecast to rise 3.3% overall, driven by strong growth in:
- Commercial demand: +14.4%
- Residential demand: +13.9%
- Industrial demand: +12.1%
At the same time, natural gas used for electric generation is expected to decline 10.8%, reflecting continued shifts in generation strategies.
Despite rising demand, the appraisal indicates no anticipated supply shortages. Independent system operators serving Michigan, along with the state’s capacity demonstration process, confirm that sufficient generation and transmission capacity is available to meet projected needs.
Energy Prices Continue to Climb
While supply remains stable, costs are trending upward. The U.S. Energy Information Administration (EIA) forecasts average residential electricity prices in the East North Central region to reach 17.57 cents per kWh in 2025, a 6.3% increase year over year. Actual prices in Michigan will continue to vary by utility.
Fuel costs show mixed movement:
- Residential propane averaged $2.16 per gallon in October 2025, unchanged from 2024.
- No. 2 heating oil began the season at $3.13 per gallon, up slightly year over year.
- Midwest gasoline prices are expected to average $2.96 per gallon in 2025 before dropping to $2.65 in 2026, with gasoline demand declining modestly.
Utility Rate Hikes Add Pressure
In March 2025, the MPSC approved a $154 million electric rate increase for Consumers Energy. Although the approved amount was significantly lower than the utility’s original $325 million request, it follows another rate hike approved just a year earlier. These recurring increases underscore the growing cost burden on Michigan ratepayers, even as energy demand continues to rise.
The Impact of AI and Data Centers
A major driver behind increasing electricity demand nationwide is the rapid expansion of AI-driven data centers. Investment in data center infrastructure now exceeds what the U.S. spent to build the entire interstate highway system (inflation-adjusted). These facilities require massive, continuous power loads, placing additional strain on regional grids.
As utilities invest heavily in new generation, transmission, and grid upgrades to support this growth, costs are often passed on to customers—contributing to higher electric bills for residential and commercial users alike.
What This Means for Industrial Operations
For manufacturers, utilities, and large-scale facilities, these trends highlight the importance of:
- Reliable, scalable electrical infrastructure
- Efficient power distribution equipment
- Forward-looking planning to accommodate load growth and rate volatility
At J&P Electrical Company, we support industrial customers navigating this evolving energy environment by supplying large-scale, high-quality electrical equipment designed to meet increasing demand while maintaining reliability and compliance. As Michigan’s energy needs continue to grow, having the right electrical infrastructure in place will be more critical than ever.
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J&P Electrical is a full-service electrical supply company. At J&P, we source contractors, end-users, and supply houses with new surplus, quality reconditioned, and obsolete electrical equipment. We also purchase a wide range of heavy industrial electrical equipment such as bus plugs, bus duct, transformers, circuit breakers, fuses, and switchboards. Call us at 877-844-5514 for assistance.
Written by the Digital Marketing Team at Creative Programs & Systems: https://www.cpsmi.com/.