Electricity consumption by sector
Electricity consumption can be classified into four broad segments. The segments are based the electricity end user. The segments are:
- Residential – electricity consumed by individuals in households
- Commercial – electricity consumed by businesses for all commercial activities
- Industrial – electricity consumed for various industrial processes
- Transportation – electricity consumed in the transport industry
Demand growth in these sectors
The residential and commercial sectors are the largest electricity consumers. They use almost three quarters of the electricity produced in the U.S. Residential consumption increased by 3.1% year-over-year (or YoY) for the first seven months of 2014. Commercial consumption was up by 2%, respectively, during the same period. Industrial consumption decreased by 0.1%.
Power companies with more residential and commercial sales in their sales mix will benefit. Companies with a higher percentage of industrial electricity sales will be negatively affected if this consumption trend continues.
Entergy Corporation (ETR) and Exelon Corporation (EXC) have major electricity sales exposure in the industrial sector. The two companies have 38.7% and 36.4% of their total electricity sales in the industrial sector, respectively.
In the residential and commercial space, Public Service Enterprise Group (PEG) and NextEra Energy (NEE) have the highest proportion of their electricity sales in these sectors. The four previously mentioned companies are part of the Utilities Select Sector SPDR (XLU).