Power Biz 101

Demand For Electricity Is Growing.
While efficiency improvements have had a major impact in meeting national electricity needs relative to new supply, the demand for electricity continues to increase. According to the U.S. Department of Energy’s Energy Information Administration (EIA), consumer demand for electricity is projected to grow at an average rate of 1.5 percent per year through 2030. Overall, electricity consumption is expected to increase by at least 40 percent by 2030.[10]

Today, our nation’s demand for electricity is at an all-time high. American homes use 21 percent more electricity today than they did in 1978. Going forward, electricity use will continue to grow as house sizes increase and consumers use more electric appliances and devices. Yet, even as electricity use increases, the average American household’s total spending on electricity has fallen over time. As shown on page 36, average annual expenditures on electricity fell from 2.7 percent of total household expenditures in 1994, to 2.5 percent of household expenditures in 2004.

To meet the increasing demand for electricity and to ensure fuel diversity and reliability, electric companies must invest in new baseload power plants. According to EIA, 258 gigawatts (GW) of new capacity will be needed by 2030.[11] Based on EIA assumptions, if all of this new capacity is built, costs would be approximately $412 billion (in 2005 dollars).

Electric companies work with their customers on ways that consumers can reduce their electricity use and control their bills with energyefficiency programs. Between 1989 and 2005, electric company demandside management (DSM) programs saved almost 797 billion kWh of electricity. That is enough to power almost 74 million average U.S. homes for one year.[12] These savings are equal to the annual electricity output of slightly more than 336 baseload power plants (rated at 300 megawatts each). During the same period, the electric utility sector spent more than $30 billion on DSM programs. In 2005 alone, electric companies spent more than $1.9 billion on DSM programs—an increase of more than 23 percent from 2004.

Electricity Use In The Typical U.S. Home - Yesterday, Today, And Tomorrow

Sources: The Brattle Group, National Association of Home Builders.

At Today's Electricity Prices, Electricity's Share Of The Household Budget Is Smaller Than It Was In 1994

Source: Bureau of Labor Statistics.

[10]U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 2007, February 2007.
[11]Ibid.
[12]EIA, Electric Power Annual 2005, October 2006.