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Retail electric sales to rise this summer led by commercial, industrial demand: EIA

Retail U.S. electricity sales will be 1.5 percent higher this summer than last summer with much of the growth coming from the commercial and industrial sectors, according to new estimates from the Energy Information Administration (EIA).

The projections reflect an improving economy following the pandemic-related downturn in 2020, the EIA said in its Summer 2021 Electricity Industry Outlook, a supplement to the agency’s Short-Term Energy Outlook.

Based on economic forecasts from IHS Markit, the EIA expects U.S. 2021 GDP to grow by 6.2 percent. The EIA forecasts the rebound in economic activity will push retail sales to the industrial sector in June, July, and August to be 4.5 percent higher than in the same period last year.

The EIA also sees increased economic activity boosting commercial sector demand for electricity. The agency forecasts retail electricity sales to the commercial sector this summer will be 2.6 percent higher than last summer but still 3 percent less than in 2019.

At the same time, the EIA projects a small decline in residential sector retail electricity demand this summer with sales 0.9 percent lower than last summer, mostly because of milder weather forecasts from the National Oceanic and Atmospheric Administration. The projected decrease in retail sales will be offset somewhat by growth in the number of residential customers and by more people working from home than in past years, the EIA noted.

The EIA forecasts a 1.6 percent increase in the number of residential electricity customers in 2021 because of a rebound in household formation after the economic slowdown of 2020, but also forecasts a decline in the amount of electricity consumed by a typical home. The EIA expects electricity use per residential customer to average 1,090 kWh per month between June and August 2021, which would be 2.5 percent less than last summer.

Between June and August 2020, retail electricity sales across all sectors totaled 1,055 billion kilowatt hours (kWh), the lowest level since the summer of 2015. Retail electricity sales to the commercial and industrial sectors showed an even steeper decline, totaling 357 billion kWh last summer, the lowest level since 2004. While retail sales to the industrial sector last summer totaled 239 billion kWh, the lowest level since the 2009 recession.

Residential electricity sales, meanwhile, reached a record high, hitting 457 billion kWh between June and August 2020. Near record warm temperatures contributed to the rise, as did the fact that more people were working from home and spending more time in their homes as a result of COVID-19 stay-at-home orders and social distancing guidelines, the EIA said.