EIA forecast sees electricity demand slump through 2009

10 June 2009 — During the first quarter of 2009, total consumption of electricity fell by an estimated 3 percent compared to the same period last year, according to data from the U.S. Department of Energy’s Energy Information Administration. EIA said the fall is largely due to weak industrial consumption.

Expected residential retail sales growth during the second half of the year is expected to slightly offset continued declines in industrial electricity sales. Total consumption is projected to fall 1.8 percent for all of 2009 and then rise by 1.2 percent in 2010.

The decline in overall electricity generation, combined with projected increases from natural gas, nuclear and renewable (hydroelectric and wind) generation sources, are projected to lead to a 4.6 percent fall in coal consumption in the electric power sector this year. EIA projects electric power sector consumption will reach 994 million short tons (MMst), the first time since 2002 that annual consumption would be below the billion short ton level. The expected uptick in electricity generation next year is expected to lead to a 1.7 percent increase in electric-power-sector coal consumption.

The monthly average Henry Hub natural gas spot price is expected to stay under $4 per thousand cubic feet (Mcf) until late in the year. EIA said abundant natural gas supplies and weak demand driven by an 8 percent decline in industrial sector consumption will hold prices at that level. The price is projected to increase from an average $4.13/Mcf in 2009 to an average $5.49/Mcf in 2010 as expected economic growth boosts industrial consumption of natural gas.

While total natural gas consumption remains hampered by the broad economic downturn, EIA said the persistence of low natural gas prices into the fourth quarter of 2009 is expected to lead to a 2.7 percent increase in electric power sector consumption in 2009. In 2010, electric power sector consumption is expected to remain flat as natural gas prices rise relative to coal prices.

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