Declining Electricity Sales in a Growing Economy: Aberration or New Normal?

Electricity sales normally grow and fall with economic activity, but since 2011, that pattern has been turned on its head. The Washington Post offers four explanations for the change and how it threatens utilities' very existence.

The Energy Information Administration names four key reasons that Americans bought less electricity in the period since 2011 than they did in the preceding years: 

  • Homes and household appliances are more efficient; 
  • Office buildings are saving energy on lighting and energy; 
  • Industrial electricity consumers are still rebounding from the recession;
  • Solar power is beginning to make a dent in demand for electricity. 

Although this pattern may not persist and even the EIA offers reasons for skepticism, saying it may just be a 'blip,' electric utilities are taking it seriously. As Wonkblog's Brad Plumer explains, "Even though solar power currently provides just 0.2 percent of U.S. electricity, prices are dropping fast, and even a small amount of distributed solar generation could prove disruptive. David Crane, CEO of NRG Energy, has called these trends 'a mortal threat to the existing utility system.'"

Solar is just one element of improving efficiency and reducing demand, but the expansion of plug-in electric vehicles and other changes point to an evolving industry. "Industry observers are watching all of these trends closely. One article last year ... argued that 'the drop in electricity demand growth appears to be permanent, not transitory.'"

 

Full Story: Americans are buying less electricity. That's a big problem for utilities.

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