January 8, 2014

Declining Electricity Sales and Utilities

The Washington Post reports that while the economy continues to grow and people are buying larger homes, utility companies have been selling less and less electricity since 2011.  After rebounding in 2010 following the end of the Great Recession, electricity sales declined in 2011 and 2012, and the U.S. Energy Information Administration (EIA) expects that they declined again in 2013, and will continue to decline in the next two years.

The article attributes this downward trend to:
  1. A 5% decline in residential electricity use in 2011 and 2012, despite the fact that more houses were being built and homes were actually getting larger. EIA attributes this decline to more efficient household appliances, better-insulated newer homes, and warmer winters.
  2. Office buildings becoming more efficient as efficiency standards for lighting and space heating go into effect.
  3. Industrial sector electricity use remaining below 2007 levels, reflecting a combination of economic and efficiency factors.
  4. Solar power and other forms of on-site generation possibly reducing utility sales.
While solar power currently accounts for a very small part of electric generation, solar prices are falling rapidly and could pose a serious threat to utilities. In response, some utilities have proposed charging people who generate their own power a surcharge to reflect the utilities’ on-going costs. Other utilities have proposed that states decouple their rates from their sales.