Bloomberg News

Natural Gas Gains Power Plant Share From Coal, EIA Says

June 27, 2012

U.S. power plants produced the same amount of electricity from natural gas and coal for the first time in April as low gas prices boosted demand, a government report showed.

Each of the fossil fuels accounted for 32 percent of the 296.1 million megawatt-hours generated during the month as coal’s share declined 23 percent to a record low, the Energy Department’s Energy Information Administration said in a report today. Gas’s share rose 36 percent during the month.

“The shift from coal to natural gas consumption is again most notable in the Southeast, Central, mid-Atlantic and Northeast regions,” the department said in its Electric Power Monthly report. “The monthly average spot price for Henry Hub natural gas remained below the monthly average spot price for Central Appalachian coal in April of 2012, as it has since December 2011.”

U.S. power output fell 2.3 percent during the month, the report showed. Companies decide which generating units to run based on operating costs, of which fuel prices represent “the lion’s share,” the department said.

Gas Gain

Power plants burned 36 percent more natural gas in April for a total of 744.5 billion cubic feet from 548.3 billion a year earlier. The increase represents 6.5 billion cubic feet a day of additional gas demand during the month, up from the average daily gain of 6.4 billion reported for March and 5.8 billion in February.

“Natural gas consumption increased in all regions,” with the biggest gains in the Southeast, where gas use rose by 38 percent, the department said.

Coal use fell to 51.6 million tons from 66.9 million in April 2011. Coal-fired generation fell by 88 percent in the Northeast and is now contributing less than 1 percent of total output in the region, the department said.

The average price for natural gas at the Henry Hub in Louisiana, the delivery point for New York futures, dropped for the eighth straight month, the department said. Gas at the benchmark hub averaged $2.03 per million British thermal units in April compared with $2.68 per million Btu for Central Appalachian coal, according to department data.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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