Electricity

This month's STEO includes a special supplement (Summer 2013 Outlook for Residential Electric Bills) describing EIA's expectations about residential electricity usage and electric bills during the summer months. EIA forecasts the average U.S. residential electric bill over the period of June-August 2013 will total $395, about 2.5 percent lower than the average bill last summer. A reduction in the average summer electricity usage per customer, because of forecast milder temperatures, is offset somewhat by projected higher average U.S. retail electricity prices in most areas of the country. Average customer electricity usage projections will also now appear in STEO Table 7a and in the STEO custom table builder.

The North American Electric Reliability Corporation (NERC) has issued its 2013 Summer Reliability Assessment for the electricity industry during the upcoming summer months. NERC's key findings indicate that Texas and California may face challenges balancing electricity demand with available capacity under extreme weather or adverse supply conditions. Also, increased wind and solar generation capacity in certain regions and persisting drought conditions west of the Mississippi could result in increased supply uncertainty during peak demand periods.

U.S. Electricity Consumption

For the summer months of June through August of 2013, EIA expects the average U.S. residential customer will use a total of 3,200 kilowatthours of electricity, which is 4.6 percent lower than last summer. However, because of the relatively cold first quarter of 2013, EIA projects residential customers will use an average of 10,883 kWh for the entire year of 2013, which is 0.4 percent more than 2012. This growth in annual electricity usage, combined with a projected 0.7-percent increase in the number of residential customers, translates to a forecast increase of 1.3 percent in total retail sales of electricity to the residential sector during 2013. Retail sales of electricity to the commercial sector grow by 0.9 percent in 2013, while retail sales to the industrial sector stay relatively flat this year.

U.S. Electricity Generation

EIA expects total U.S. electricity generation will grow by 0.9 percent annually in both 2013 and 2014. Water supply in the Pacific Northwest this spring is lower than last year, leading to a 4-percent decline in the level of conventional hydroelectric generation during the first quarter of 2013 compared with the same period last year. EIA has revised its forecast for hydropower generation for the upcoming summer months to better reflect the NOAA water supply outlook. Generators have been running their existing coal capacity at higher rates so far this year in response to the increasing cost of natural gas relative to coal. This trend is expected to continue, leading to an 8.5-percent annual increase in U.S. electricity generation from coal and an 8.2-percent decline in U.S. natural gas generation during 2013.

U.S. Electricity Retail Prices

The U.S. residential electricity price averaged 11.9 cents per kWh in 2012. EIA expects the average residential price will grow by 1.1 percent in 2013 and by 1.9 percent in 2014. The residential price during the summer months this year (June-August) is expected to average 12.3 cents/kWh, a 2.2-percent increase from the price last summer.