Rising utility bills during the coldest winter weather in 32 years, along with coal and nuclear plant closures, are bolstering utilities sector exchange traded funds.
The Utilities Select Sector SPDR (NYSEArca: XLU) has increased 8.3% year-to-date, outperforming all other SPDR sector ETFs so far this year. [The Discreet Decline of Discretionary ETFs]
Daily power sales in New York averaged $165.24 per megawatt-hour from the end of December up to March 24, a 91% jump year-over-year, reports Naureen S. Malik for Bloomberg.
Consolidated Edison (NYSE: ED) calculates that the typical residential electric bill increased to $118 in February, up 22% year-over-year.
According to the U.S. Energy Information Administration, households in the lower 48 states spent 5% more on electricity and 10% more for gas on average over winter.
Moreover, prices may rise further as 79 coal-fired power plants shutdown due to environmental emission rules and the Entergy Corp.’s Vermont Yankee nuclear plant closes shop, the fifth to announce a permanent shutdown over the last two years.
“For those willing to write off nuclear and coal, this winter should raise a red flag,” Stephen Schork, president of Schork Group Inc., said in the article. “We are setting ourselves up for a massive rally in natural gas.”