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Short-Term Energy Outlook

Release Date: May 12, 2015  |  Next Release Date: June 9, 2015  |  Full Report    |   Text Only   |   All Tables   |   All Figures


Henry Hub natural gas prices below $3/MMBtu have led to a shift away from the use of coal and toward natural gas for fueling power generation. During the first two months of 2015, coal fueled 37.4% of total U.S. electricity generation, down from 43.0% during the same period in 2014. In contrast, natural gas generation accounted for 27.6% of total generation, up from 23.7% during the first two months of 2014. The January-February natural gas fuel share of total electricity generation has been higher only once, in 2012, when it averaged 27.9%.

Electricity Consumption

The National Oceanic and Atmospheric Administration projects warmer temperatures this summer than last year's mild summer. U.S. cooling degree days during the summer months (April-September) of 2015 are projected to total about 6% more than the same period last year. Higher temperatures should lead to increased use of electricity for air conditioning. EIA forecasts U.S. retail sales of electricity to the residential sector will be 3,920 gigawatthours per day (GWh/d) during the summer of 2015, which is 2.9% higher than last summer. Higher residential consumption of electricity this summer is offset somewhat by a year-over-year decline in sales during the first quarter, leading to forecast 2015 annual growth in U.S. residential electricity sales of 0.5%. EIA expects U.S. retail sales of electricity to the commercial and industrial sectors to grow by 1.5% and 0.6%, respectively, during 2015.

Electricity Generation

Total U.S. generation of electricity is forecast to average about 11,340 GWh/d in 2015, which is 1.2% higher than total generation last year. The use of coal for power generation stays low by historical standards as the forecast natural gas price at Henry Hub remains below $3/MMBtu through August. Lower use of existing coal capacity, combined with some coal retirements and regular seasonal maintenance, reduce projected U.S. coal generation in April and May so that its share of total generation is only 1.2 percentage points higher than the natural gas generation share. This is the closest convergence in generation shares between the two fuels since April 2012. EIA forecasts coal's share of U.S. total generation will be 35.8% in 2015, down from 38.7% in 2014. In contrast, the natural gas fuel share averages 30.7% this year, up from 27.4% in 2014.

Electricity Retail Prices

EIA expects continued growth in average U.S. residential electricity prices over the forecast period, but at a slower pace than last year. The forecast U.S. retail residential price increases by 1.6% in 2015 and by 1.8% in 2016. Industrial electricity prices, which are more responsive to changes in fuel costs, are expected to fall by 2.4% in 2015 and then rise by 1.2% in 2016.

U.S. Electricity Summary
  2013 2014 2015 2016
Retail Prices (cents per kilowatthour)
Residential Sector 12.12 12.50 12.70 12.93
Commercial Sector 10.28 10.75 10.68 10.82
Industrial Sector 6.84 7.01 6.84 6.92
Power Generation Fuel Costs (dollars per million Btu)
Coal 2.34 2.36 2.31 2.32
Natural Gas 4.33 4.98 3.84 4.13
Residual Fuel Oil 19.32 19.18 11.95 13.15
Distillate Fuel Oil 23.05 22.34 14.14 16.16
Generation (billion kWh per day)
Coal 4.332 4.344 4.062 4.076
Natural Gas 3.082 3.074 3.480 3.410
Nuclear 2.162 2.184 2.132 2.135
Conventional Hydroelectric 0.736 0.709 0.704 0.730
Renewable (non-hydroelectric) 0.695 0.770 0.824 0.898
Total Generation 11.140 11.214 11.344 11.380
Retail Sales (billion kWh per day)
Residential Sector 3.82 3.84 3.86 3.86
Commercial Sector 3.68 3.72 3.77 3.82
Industrial Sector 2.68 2.62 2.63 2.66
Total Retail Sales 10.21 10.20 10.29 10.36
Primary Assumptions (percent change from previous year)
Real DIsposable Personal Income -0.2 2.5 3.3 2.0
Manufacturing Production Index 2.9 3.8 2.1 2.7
Cooling Degree Days -12.6 -0.5 6.3 -1.3
Heating Degree Days 18.5 1.9 -3.0 -4.2
Number of Households 0.7 0.8 0.7 0.8

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