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Electricity Monthly Update

With Data for October 2014  |  Release Date: Dec. 23, 2014  |  Next Release Date: Jan. 26, 2015

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Resource Use: October 2014

Supply and fuel consumption

In this section, we look at the resources used to produce electricity. Generating units are chosen to run primarily on their operating costs, of which fuel costs account for the lion's share. Therefore, we present below, electricity generation output by fuel type and generator type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.

Generation output by region

map showing electricity regions

In October 2014, net generation in the United States decreased 0.2% compared to the previous October, a small change that does not necessarily reflect the large difference in temperatures between the two months. While last October had below-normal temperatures, this year the continental United States experienced its fourth-warmest October on record, thanks to average temperatures that were significantly above average in the western half of the country and in most of the Northeast.

The above-average temperatures this October led to both a decrease in residential heating demand in the cooler parts of the country (where residents would usually be heating their homes at this time of year) and an increase in residential cooling demand in the warmer parts of the country (where residents would usually not need to cool their homes), as evidenced by the 14% decrease in population-weighted heating degree-days and 13.6% increase in cooling degree-days. At the regional level, Texas, the West, Florida, and the Northeast regions saw an increase in electricity generation compared to October 2013, while the Mid-Atlantic, Central, and Southeast regions saw decreases.

Compared to the previous October, across the board, coal generation was down while natural gas generation was up. Changes in nuclear generation were more mixed, with Florida, the Southeast, and Mid-Atlantic regions seeing more nuclear generation this October, while the Central, West, Northeast regions, and Texas saw less. This probably reflects the regional distribution of the fall nuclear refueling season.

Fossil fuel consumption by region

map showing electricity regions

The chart above compares coal consumption in October 2013 and October 2014 by region and shows that coal consumption from electricity generation has decreased in every region.

The second tab compares natural gas consumption by region. Electricity generation from natural gas increased in every region except for Florida. The increase was significant in the West and Texas, with the Western region having the largest percentage increase (16%) in natural gas consumption.

The third tab presents the change in the relative share of fossil fuel consumption by fuel type on a percentage basis, calculated using equivalent energy content (Btu). This highlights changes in the relative market shares of coal, natural gas, and petroleum. Florida was the only part of the country where coal and natural gas both showed a very slight increase in relative market share because of a drop in petroleum consumption. All other regions saw natural gas increase its relative market share at the expense of coal, with the Western region having the largest shift from coal to natural gas from October 2013 to October 2014.

The fourth tab presents the change in coal and natural gas consumption on an energy content basis by region. The changes in total coal and natural gas consumption were very similar to the changes seen in total coal and natural gas net generation in each region.

Fossil fuel prices

To gain some insight into the changing pattern of consumption of fossil fuels over the past year, we look at relative monthly average fuel prices. A common way to compare fuel prices is on an equivalent $/MMBtu basis as shown in the chart above. The price of natural gas at Henry Hub decreased from the previous month, going from $4.04/MMBtu in September 2014 to $3.89/MMBtu in October 2014. The natural gas price for New York City (Transco Zone 6 NY) decreased for the ninth consecutive month, going from $2.30/MMBtu in September 2014 to $2.21/MMBtu in October 2014. Like many natural gas prices in the Northeast, the New York City natural gas price is now well below the price of natural gas at Henry Hub. This is mainly due to the growth of natural gas coming out of the Marcellus region and a slight increase in pipeline capacity to the Northeast.

For the third consecutive month, the New York Harbor residual oil price decreased from the previous month, going from $16.34/MMBtu in September 2014 to $14.62/MMBtu in October 2014. Regardless, oil used as a fuel for electricity generation is almost always priced out of the market.

A fuel price comparison based on equivalent energy content ($/MMBtu) does not reflect differences in energy conversion efficiency (heat rate) among different types of generators. Gas-fired combined-cycle units tend to be more efficient than coal-fired steam units. The second tab shows coal and natural gas prices on an equivalent energy content and efficiency basis. The spread between the Henry Hub natural gas price and the price of Central Appalachian coal on a $/MWh basis decreased only slightly compared to last month. However, because of the continued decrease in the New York City natural gas price, the price of Central Appalachian coal on a $/MWh basis continues to be higher than the New York City natural gas price.

The conversion shown in this chart is done for illustrative purposes only. The competition between coal and natural gas to produce electricity is more complex. It involves delivered prices and emission costs, the terms of fuel supply contracts and the workings of fuel markets.

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