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Short-Term Energy Outlook

Release Date: September 7, 2016  |  Next Release Date: October 13, 2016  |  Full Report    |   Text Only   |   All Tables   |   All Figures


The power industry on the West Coast has benefited from improved water supply conditions and from new capacity additions that use renewable energy sources (especially solar and wind). Summer (June-August) electricity generation from hydropower in the area served by the California Independent System Operator (CAISO) is up 3.2 terawatthours (TWh) from last summer, and generation from other renewable energy sources is up 2.3 TWh. Partially offsetting this summer-over-summer increase in renewables is a 5.8 TWh decline in thermal generation, almost all of which is fueled by natural gas.

Electricity Cosumption

A mild winter earlier in the year led to reduced use of electricity for residential space heating, particularly in the southeastern states. Total U.S. retail sales of electricity to the residential sector during the first half of this year are estimated to have been 4.9% lower than sales in the first half of 2015. Warmer summer temperatures contribute to EIA's forecast of a 4.5% year-over-year increase in residential electricity sales during the third quarter of 2016. For all of 2016, EIA projects residential electricity sales will be just 0.1% lower than in 2015. Forecast residential sales grow by 0.9% in 2017. Sales of electricity to the commercial sector are relatively unchanged in 2016 but grow by 1.0% in 2017. Forecast industrial electricity sales decline by 1.2% in 2016, then rise by 1.3% in 2017.

Electricity Generation

The price of natural gas delivered to electric generators averaged $2.23/MMBtu in March of this year, which was the lowest price (in nominal terms) since 1999. Low natural gas prices have encouraged the power industry to use more of the fuel for electricity generation. In 2016, natural gas is expected to supply 34.5% of electricity generation, up from 32.7% last year. Coal is forecast to supply 30.1% of electricity generation this year, compared with 33.2% in 2015. Natural gas prices have increased in recent months, and EIA expects this trend to continue through the forecast horizon, with the delivered natural gas price reaching almost $4.00/MMBtu by the end of 2017. These higher prices should encourage more electricity generation from coal-fired power plants during 2017. The natural gas share of electricity generation in 2017 is forecast to fall to 33.3%, and the coal share of generation is expected to rise to 31.0%.

Electricity Retail Prices

The U.S. residential electricity price averaged 12.7 cents per kilowatthour (kWh) in June 2016, the latest available data. This price is 1.5% lower than the U.S. residential price in June 2015. EIA expects the annual average U.S. residential electricity price to fall by 0.6% in 2016 and then rise by 3.0% in 2017.

U.S. Electricity Summary
  2014 2015 2016 2017
Retail Prices (cents per kilowatthour)
Residential Sector 12.52 12.67 12.60 12.98
Commercial Sector 10.74 10.59 10.45 10.71
Industrial Sector 7.10 6.90 6.79 6.94
Power Generation Fuel Costs (dollars per million Btu)
Coal 2.36 2.23 2.18 2.24
Natural Gas 4.98 3.22 2.96 3.44
Residual Fuel Oil 19.19 10.36 8.24 9.60
Distillate Fuel Oil 22.32 14.43 10.62 13.39
Generation (billion kWh per day)
Coal 4.333 3.715 3.363 3.485
Natural Gas 3.087 3.658 3.851 3.753
Nuclear 2.184 2.184 2.177 2.154
Conventional Hydroelectric 0.705 0.682 0.733 0.731
Renewable (non-hydroelectric) 0.765 0.817 0.906 1.003
Total Generation 11.215 11.198 11.157 11.259
Retail Sales (billion kWh per day)
Residential Sector 3.86 3.84 3.83 3.87
Commercial Sector 3.70 3.72 3.72 3.76
Industrial Sector 2.73 2.63 2.59 2.63
Total Retail Sales 10.31 10.20 10.17 10.28
Primary Assumptions (percent change from previous year)
Real DIsposable Personal Income 3.5 3.5 2.6 2.7
Manufacturing Production Index 1.3 1.1 0.3 2.0
Cooling Degree Days -0.7 14.8 0.0 -5.7
Heating Degree Days 1.9 -10.3 -2.3 4.1
Number of Households 1.0 1.0 1.0 1.1

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