Thursday, March 29, 2012

U.S. consumption of electricity will fall during 2012

U.S. Electricity Consumption

EIA expects total U.S. consumption of electricity will fall slightly during 2012, and then grow by 1.9 percent during 2013 (U.S. Total Electricity Consumption Chart). Growth in retail sales of electricity to the commercial and industrial sectors during 2012 of 0.7 percent and 0.8 percent, respectively, will be offset by a 2.1 percent decline in residential sector consumption. Residential consumption falls this year as a result of milder weather compared with last year. EIA estimates that U.S. residential electricity consumption during January and February was about 9 percent lower than during the same months of 2011, primarily because of the 17-percent decline in heating degree-days nationwide. Similarly, the projected 15-percent year-over-year decline in U.S. cooling degree-days this year is expected to lead to reduced electricity demand this summer. The total number of U.S. households is expected to grow by 1.4 percent during 2013, which would be the highest growth rate since 1998.

U.S. Electricity Generation

Recent data show that the trend in displacing coal with natural gas as a generation fuel has accelerated in response to the current low price of natural gas delivered to electric generators. U.S. generation fueled by natural gas in December 2011 was 11.6 percent higher than in December 2010. In contrast, coal-fired generation declined by 20.7 percent over the same period. EIA expects this fuel displacement pattern to continue at least through the first half of 2012, causing the annual average share of total generation fueled by natural gas to rise from 24.8 percent in 2011 to 27.1 percent for 2012. As delivered natural gas prices begin increasing later this year, in response to higher demand and flattening growth in production, EIA expects the trend in fuel displacement will reverse slightly in 2013, with natural gas’ share of U.S. generation falling back to an annual average of 26.1 percent (U.S. Electricity Generation Chart).

U.S. Electricity Generation by Fuel, All Sectors

U.S. Electricity Retail Prices

The price of natural gas delivered to electric generators is estimated to have averaged about $3.30 per MMBtu in February 2012, which would be its lowest nominal value in 10 years. EIA expects these low fuel costs to be passed through to residential electricity consumers over the next two years. Average U.S. residential electricity prices are forecast to rise by 0.4 percent in 2012, and then fall by 0.9 percent in 2013 (U.S. Residential Electricity Prices Chart). These growth rates compare with an average annual increase of 2.6 percent during the past five years.

U.S. Electricity Retail Prices

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