Electricity Forecast: Slow and Steady
Average electricity prices are expected to remain virtually unchanged through 2010, rising a scant 0.4 cents per kilowatt-hour, according to the Energy Information Administration's (EIA's) "Annual Energy Outlook 1995" (DOE/EIA-0383(95)). If the forecast holds true, the average household electric bill should increase by only $3 to $4 per month. Good news for residential consumers; more pressure for utilities. The flat forecast reflects low projections for major fuel prices, which break with previous EIA forecasts. EIA administrator Jay E. Hakes says the downward revisions reflect the impact of improved technology, which has increased productivity and reduced production costs.
Although EIA predicts a 45-percent price increase for natural gas used for electric generation from $2.63 to $3.82 per thousand cubic feet, it expects the increase will be largely offset by stable coal prices. Coal, which fuels over half the electricity generated in the United States, will rise only 8 percent between 1998 and 2010. Other offsetting factors include reduced spending for new and existing plants, and steady operations and maintenance costs. Since most regions of the country already have adequate capacity to meet demand growth, EIA expects generating capacity to grow only 0.6 percent a year, while electricity sales increase by 1.1 percent annually. (em LG
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