Dive Brief:

• Retail sales to the residential sector have bumped around this year, falling 1.7% in the first half and then recovering in the third quarter as cooler weather swept over the country, but the U.S. Energy Information Administration (EIA) is predicting a modest decrease in residential sales for full-year 2016, SNL Energy reports. 
• Residential sales will decline 0.5% next year, to 3.86 billion kWh daily, unchanged from 2014 levels.
• Increases to commercial and industrial demand, however, will offset the loss, and the EIA is predicting retail sales of 10.3 billion kWh/day across the United States, up from 10.21 billion kWh/day in 2013.
• While coal generation has now been outpaced by gas in three consecutive months, and four times this year, EIA still sees coal with the edge in 2016, with more than 34% of the generation share compared with gas' 31.6%.

Dive Insight:

Natural gas continues to pull market share from coal, and according to the EIA September marked the third consecutive month where gas-fired power plants exceeded generation from coal-fired plants.

It's a relatively new phenomenon, but also one expected to continue. Before April 2015, the monthly share of total U.S. generation fueled by coal had always been larger than the natural gas share. But natural gas generation in September was 123,248 GWh, 4% higher than the level generated by coal.

"This increased use of natural gas for electricity generation primarily reflects sustained low prices for the fuel," EIA said. The average Henry Hub spot price for natural gas was $2.09/MMBtu in November, the lowest price since April 2012.

Overall, however, EIA still expects coal to have a higher generation share than gas over the entire course of 2016. Sightly higher Henry Hub gas prices are expected to combine with higher utilization rates of exsisting coal plants to give coal the lead in the generation mix next year.

Retail sales for utilities have been up and down this year, but EIA predicts 2016 figures will largely return to last year's levels.

Residential sakes in the first half of this year were 1.7% lower than the same period in 2014, largely due to a mild winter. But third quarter residential sales this year were 5.4% higher than in 2014, with cooling degree days during that quarter 13% higher than the year before.

Retail residential sales rise are forecast to rise by 0.5% in 2015 and then decline at the same rate in 2016. EIA see sales to the commercial sector rising by 0.6% and by 0.7% in 2015 and 2016, respectively; the industrial sector will see sales fall by 3.6% in 2015 and then rise by 1.4% in 2016.

Coal's generation will fall from 4.33 billion kWh/day in 2013 to 3.85 billion kWh/d next year; over the same period, gas generation will rise from 3.08 billion kWh/d to 3.57 billion kWh/d.

Total U.S. electricity generation in 2015 is expected to average 11.3 terawatthours per day, 0.5% higher than 2014 generation, EIA said.

"Total generation grows by an additional 0.1% in 2016," the agency said, and though it projects natural gas prices to begin rising slowly, they are forecast to remain at low levels. Henry Hub gas will remain below $3/MMBtu through August 2016, the agency predicts.

"These sustained low prices contribute to natural gas accounting for a historically large share of electricity generation," EIA said. "During 2015, EIA expects the share of total generation fueled by natural gas to average 32.4% compared with a share of 27.5% in 2014. Coal's share of total electricity generation is forecast to average 34.1% in 2015 compared with 38.6% last year. In 2016, the natural gas share of generation is forecast to be 31.6%, with the coal share at 34.1%."