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Summer Energy Appraisal sees electricity sales decline, natural gas consumption up; prices at the pump to be higher

06/28/2019 10:08 AM | Cameron Baker (Administrator)

LANSING, Mich. – Sales of electricity in Michigan are expected to be down for 2019, according to the Michigan Public Service Commission's Michigan Energy Appraisal Summer Outlook 2019, released today. Also, natural gas consumption is projected to be higher from May through September compared to the same period in 2018.

Electricity sales are expected to decrease by 0.9 percent to 102.9 thousand gigawatt hours, according to the annual MPSC analysis of trends in the state's fuel and power sectors. That's down from 103.8 thousand gigawatt hours from the previous year. Residential sales are expected to drop 2.2 percent and commercial 0.6 percent. But industrial sales are expected to rise 0.3 percent. Consumption in the residential and commercial sectors is largely dependent on weather. If the summer is warmer than normal, then demand for electricity to power air conditioning could rise.

Natural gas demand is expected to rise 1.4 percent this year, due mainly to increased use for electricity production driven partially by January's polar vortex, according to the report. Higher than forecast temperatures this summer will also increase demand for cooling and electricity to run air conditioning. If prices remain at current levels, this year's average residential bill is expected to be $20 lower than last year due largely to falling U.S. prices.

Michigan drivers should plan to pay more for a gallon of gasoline this summer as demand for the fuel is expected to increase for the seventh year in a row. A gallon is expected to average $2.83 during the April through September summer driving period. The price of a gallon of diesel fuel is expected to be $3.20, down a penny from last year.

Other highlights from the MPSC's Summer 2019 Energy Appraisal:

Electricity

  • This year's combined peak electrical demand plus planning reserve margin requirements are about 4 percent higher than was projected for 2018.
  • In 2018, electrical demand peaked for Consumers Energy at 7,568 megawatts on July 5, and for DTE Energy at 11,418 megawatts on Sept. 5.
  • The generation capacity required to serve the Lower Peninsula increased by 10.6 megawatts in 2019/20, compared to 2018/19. Generation capacity to serve the Upper Peninsula and eastern Wisconsin rose by 195 megawatts.
  • This summer's peak demand plus reserve margin for the Lower Peninsula is expected to be 21,976 megawatts, up from 21,121 megawatts last summer.

Natural gas

  • The average monthly residential summer bill for the four largest gas utilities – DTE Gas, SEMCO Energy, Consumers Energy, and Michigan Gas Utilities -- is projected to be approximately $34 for April 2019 through October 2019.
  • A residential customer's annual gas bill for April 2019 through March 2020 is forecasted to be $754, which is down from $773 predicted for last year.
  • Production from natural gas wells in the state continues to decline and is expected to decrease by 5.9 percent to 84.9 billion cubic feet in 2019.

Petroleum

  • S. crude oil production averaged 10.96 million barrels per day in 2018 and is expected to increase to 12.45 million barrels per day in 2019 and to 13.38 million barrels per day in 2020.
  • Absent unanticipated infrastructure or supply problems, it is expected that the price and supply of petroleum products will be stable for the remainder of 2019.

Gasoline

  • Gasoline demand will be 4.73 billion gallons, up 1.5 percent from a year ago.
  • With continued OPEC production curtailments and geopolitical risks in Iran and Venezuela, crude oil prices are likely to continue strengthening.

Weather

  • MPSC's models assume normal temperatures, but the Climate Prediction Center indicates a slightly warmer than normal summer by 2.8 percent.
  • In 2018, May through September temperatures were 37 percent warmer than normal. Heating season monthly temperatures were 1 percent below normal.

The MPSC has published a summer and winter energy appraisal every year since 1978.

For information about the MPSC, visit www.Michigan.gov/MPSCsign up for one of its listservs, or follow the Commission on Twitter.


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