New House Sales Driving Electricity Sales

Deck: 

South now 57% of new house sales, Northeast/Midwest just 16%

Today in Fortnightly

November 2015 new house sales were 4 percent greater than the prior month and 9 percent greater than November 2014. More importantly, from the perspective of the electric utility industry, as well as the natural gas utility industry, new house sales in the South were 5 percent greater than the prior month and 19 percent greater than November 2014.

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What happens in the South is crucial to the national numbers on electricity. To show why, look at the regional breakdown of electricity sales.

Year-to-date, through October of last year, 2015, the South was exactly 50 percent of residential electric utility sales nationally. The other three regions of the country, the Northeast, Midwest and West split up the remaining 50 percent. 

The South is crucial as well because its households use more electricity than the national average. And because household growth and electricity sales growth far exceed that of the other three regions. 

Houses in the South tend to be newer and larger. They run more air-conditioning and electric heating.

That household growth exceeds that of the other regions is shown by the regional breakdown of new house sales. The South has 57% of new house sales. In contrast, the Northeast and the Midwest combined have just 16% of new house sales. 

Since new houses tend to be larger, they are more likely to be occupied by households that are heavy-usage of electricity. Heavy-usage households, though a minority of all households, have a strong impact on electricity sales. One heavy-usage household can use as much or more electricity as five light-usage households.

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What happens in the South is also crucial to the national numbers on natural gas. While households in the Northeast and Midwest regions primarily use gas for heating, households in the South primarily use electricity for heating. So if the South is growing much more than the Northeast and Midwest, electric heating will grow much more than gas heating.

 

Starting with the February issue, Public Utilities Fortnightly will exclusively present such insightful measures of the electric and gas utilities industry, in our new Mega-Metrics centerfold.

Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com