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Short-Term Energy Outlook

Release Date: November 10, 2015  |  Next Release Date: December 8, 2015  |  Full Report    |   Text Only   |   All Tables   |   All Figures


Power plant operators have announced the retirement of more than 2,000 megawatts (MW) of nuclear generating capacity by 2020 (equal to 2% of current U.S. capacity). These planned retirements are in addition to the five nuclear reactors (totaling more than 4,000 MW of capacity) that have shut down over the past four years. The most recent retirement was the Vermont Yankee plant (604 MW) last December. None of these planned retirements is expected to occur before the end of 2016, which is the forecast horizon for the current STEO. Five new reactors are currently under construction and are expected to add more than 5,000 MW of new capacity by 2020. Watts Bar Unit 2 has received its operating license and anticipates beginning commercial operation next year.

Electricity Consumption

U.S. heating degree days are expected to be about 8% lower this winter compared with the winter of 2014-15. The milder winter weather is expected in most areas of the eastern United States, including the southern states, where a majority of households use electric heat pumps for primary space heating. The reduced need for heating contributes to EIA's forecast of a 1.6% decline in winter retail sales of electricity to the residential sector. For the full year, EIA projects residential electricity sales will fall by 0.3% in 2016 after growing 1.1% this year.

Electricity Generation

Natural gas prices continue to fall, with the Henry Hub price in October averaging $2.34/MMBtu compared with $3.78/MMBtu in October 2014. Falling natural gas prices have led EIA to raise its forecast of natural gas generation from last month's STEO. Electricity generation fueled by natural gas is now expected to grow by 17% in 2015. Although natural gas prices are expected to increase slightly in 2016, EIA does not expect power generators will significantly switch back from natural gas to coal next year, as forecast natural gas prices remain very low compared with recent years. Generation from both natural gas and coal are expected to decline in 2016, by 1.3% and 0.3%, respectively, while generation from hydropower and other renewables rises.

Electricity Retail Prices

The U.S. retail price of electricity to the residential sector is projected to average 12.6 cents per kilowatthour in 2015, 0.5% higher than the average price last year. The largest price increases are projected to be in New England, where residential electricity prices are forecast to increase by 8.4% in 2015, as electricity distribution companies recover higher generation and power purchase costs incurred during 2014. However, wholesale power prices in New England have been relatively low this year, and utilities in New England have been lowering retail prices in the past few months from their peak in March and April.

U.S. Electricity Summary
  2013 2014 2015 2016
Retail Prices (cents per kilowatthour)
Residential Sector 12.12 12.50 12.56 12.66
Commercial Sector 10.28 10.75 10.69 10.93
Industrial Sector 6.84 7.01 6.93 7.08
Power Generation Fuel Costs (dollars per million Btu)
Coal 2.34 2.36 2.25 2.26
Natural Gas 4.33 4.98 3.40 3.78
Residual Fuel Oil 19.32 19.18 10.80 10.95
Distillate Fuel Oil 23.05 22.34 14.64 14.84
Generation (billion kWh per day)
Coal 4.332 4.344 3.898 3.886
Natural Gas 3.082 3.074 3.601 3.555
Nuclear 2.162 2.184 2.181 2.135
Conventional Hydroelectric 0.736 0.709 0.644 0.691
Renewable (non-hydroelectric) 0.695 0.770 0.798 0.900
Total Generation 11.140 11.214 11.264 11.302
Retail Sales (billion kWh per day)
Residential Sector 3.82 3.84 3.88 3.87
Commercial Sector 3.68 3.72 3.74 3.77
Industrial Sector 2.68 2.62 2.62 2.63
Total Retail Sales 10.21 10.20 10.27 10.29
Primary Assumptions (percent change from previous year)
Real DIsposable Personal Income -1.4 2.7 3.3 3.1
Manufacturing Production Index 1.1 2.8 2.2 2.4
Cooling Degree Days -12.6 -0.6 12.6 -5.9
Heating Degree Days 18.5 1.9 -5.4 -3.3
Number of Households 0.8 1.0 0.9 1.0

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