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Short-Term Energy Outlook

Release Date: July 12, 2016  |  Next Release Date: August 9, 2016  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Electricity

The North American Electric Reliability Corporation (NERC) summer assessment of the country's bulk power system finds that anticipated reserve margins in all areas of the United States exceed NERC's target levels, indicating that capacity should be sufficient to meet projected peak electricity demand under normal circumstances. However, some regions could be stressed by localized fuel supply constraints. In particular, power generators who receive natural gas supplies from the Aliso Canyon storage facility in Southern California face limits on the amount of fuel that can be withdrawn. In that region, there is a possibility of localized loss of electric service during periods of very high power demand.

Electricity Consumption

EIA estimates that retail sales of electricity to the residential sector during the first half of 2016 were 5.4% below the first six months of 2015, primarily as a result of mild temperatures in the first quarter of 2016. Projections of a warmer-than-normal summer, especially in the Midwest, contribute to the forecast of 2.9% year-over-year growth in residential electricity sales in the second half of 2016. For all of 2016, EIA projects residential sales will be 1.1% lower than last year. Forecast residential sales grow by 1.5% in 2017. Sales of electricity to the commercial sector grow by 0.3% in 2016 and by 1.2% in 2017. EIA forecasts that industrial electricity sales will remain relatively flat in 2016, but then rise by 1.2% in 2017.

Electricity Generation

Total U.S. generation of electricity is forecast to average 11.15 terawatthours per day in 2016, which is 0.5% lower than total generation in 2015. Sustained low natural gas prices have led power generators to significantly expand the share of electricity produced by natural gas. EIA estimates that electricity generation by natural gas during the first half of 2016 was 6.8% higher than the same period last year. In contrast, generation fueled by coal fell 21.1% over the same period. During the second half of 2016, EIA forecasts that natural gas generation will grow year-over-year at rate of 2.5%, and coal generation is projected to increase by 2.9%.

In 2016, natural gas is expected to supply 34.3% of electricity generation, and coal is forecast to supply 30.2% of electricity generation. Nuclear and renewables are forecast to supply 19.4% and 14.9% of generation, respectively. Rising projected costs of natural gas encourage more generation from coal-fired power plants during 2017. The natural gas share of generation in 2017 is forecast to fall to 33.3%, and the coal share of generation is expected to rise to 31.1%. In 2017, nuclear and renewables are forecast to supply 19.1% and 15.3% of electricity generation, respectively.

Electricity Retail Prices

The latest available data (through April) show that the U.S. residential electricity price so far this year averaged 12.3 cents per kilowatthour (kWh), which is slightly below the average price during the same period last year. On an annual basis, EIA expects the U.S. residential electricity price to fall by 0.3% in 2016 and then to rise by 2.9% to an annual average of 13.0 cents/kWh in 2017.

U.S. Electricity Summary
  2014 2015 2016 2017
Retail Prices (cents per kilowatthour)
Residential Sector 12.52 12.67 12.64 13.00
Commercial Sector 10.74 10.59 10.55 10.81
Industrial Sector 7.10 6.90 6.77 6.91
Power Generation Fuel Costs (dollars per million Btu)
Coal 2.36 2.23 2.19 2.24
Natural Gas 4.98 3.22 2.92 3.55
Residual Fuel Oil 19.19 10.36 8.07 9.67
Distillate Fuel Oil 22.32 14.43 11.80 14.61
Generation (billion kWh per day)
Coal 4.333 3.715 3.369 3.511
Natural Gas 3.087 3.658 3.819 3.759
Nuclear 2.184 2.184 2.164 2.154
Conventional Hydroelectric 0.705 0.682 0.746 0.729
Renewable (non-hydroelectric) 0.765 0.817 0.916 1.000
Total Generation 11.215 11.198 11.145 11.288
Retail Sales (billion kWh per day)
Residential Sector 3.86 3.84 3.79 3.85
Commercial Sector 3.70 3.72 3.73 3.78
Industrial Sector 2.73 2.63 2.62 2.66
Total Retail Sales 10.31 10.20 10.17 10.30
Primary Assumptions (percent change from previous year)
Real DIsposable Personal Income 2.7 3.5 3.1 2.8
Manufacturing Production Index 1.3 1.1 0.4 2.6
Cooling Degree Days -0.7 14.7 -2.3 -3.1
Heating Degree Days 1.9 -10.2 -2.6 4.0
Number of Households 1.0 1.0 1.0 1.1

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