Electricity production rises
US electricity production data is the most elementary data point for investors tracking the power sector. It shows the inherent electricity consumption demand in the country.
The US saw a nominal uptick in weekly electricity production for the week ended February 6, 2015. US electricity production increased by 1.6% during the week compared to the previous week. A total of 79.2 million MWH (or megawatt hours) of electricity was produced in the United States between January 30 and February 6, 2015. The electricity output for the preceding week was 77.9 million MWH.
Interpreting production data
As you noted from the chart above, this is the second successive week when electricity production in the US has increased. However, growth has been slow. Current production levels are down by 9.4% from the peak output levels of 87.4 million MWH for the week ended January 9, 2015. Year-over-year, electricity production is 5.2% lower than electricity production for the same week last year.
This isn’t a good indication for large US power producers held by the Utilities Select Sector SPDR Fund (XLU)—like Duke Energy (DUK), NextEra Energy (NEE), Southern Company (SO), and Exelon Corporation (EXC). Lower electricity output will lead to lower revenues and reduced profits for power companies.
Weather to impact production
Weather is a major driver of electricity demand. As the winter recedes in the US, electricity production is expected to come down in the coming months, when the spring season commences in the US.
Let’s look at the regions within the US experiencing the highest growth in weekly power production through the next part of this series.