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Electricity Monthly Update

With Data for December 2014  |  Release Date: March 4, 2015  |  Next Release Date: March 24, 2015

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Resource Use: December 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 December 2014, net generation in the United States decreased 4.5% compared to the previous December as most of the country experienced significantly warmer temperatures compared to last year, which led to a decreased demand for heating compared to last December. Every state except for Virginia, North Carolina, South Carolina, and Florida experienced cooler temperatures compared to last year, as observed by the increase in total U.S. heating degree days. These temperature trends were also reflected in regional net generation trends, whereby all regions of the country, except for Florida, experienced decreases in net electricity generation compared to December 2013.

Electricity generation from coal decreased in all parts of the country compared to December 2013, except for Florida, where coal generation increased slightly. The change in natural gas generation was much more mixed throughout the country, with the Central, West, and Texas seeing decreases in natural gas generation, while the MidAtlantic and Southeast saw increases in electricity generation from natural gas. The Northeast and Florida both saw relatively no change in the amount of electricity generation produced from natural gas compared to last year.

Nuclear generation increased 2.9% compared to last December, with the Texas seeing the largest percent increase. This increase in electricity generation from nuclear occurred in Texas because in December 2013, South Texas nuclear plant experienced a refueling outage, whereas in December 2014, the plant operated at full capacity.

Fossil fuel consumption by region

map showing electricity regions

The chart above compares coal consumption in December 2013 and December 2014 by region and shows that coal consumption for electricity generation has decreased in all regions, except Florida, which saw a slight increase in coal consumption.

The second tab compares natural gas consumption by region. A substantial decrease in natural gas consumption occurred in the West. This was mainly due to the significantly warmer temperatures observed this December compared to December 2013, which led to a sharp decrease in the demand for heating in all western states. The Central region and Texas also saw a decrease in natural gas consumption in December 2014, but both declines were much less severe. The MidAtlantic and Southeast regions saw increases in natural gas consumption, mirroring the change in natural gas generation in those regions, while both the Northeast and Florida saw little change in natural gas consumption compared to last year.

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. The West was the only part of the country that saw a significant increase in coal consumption at the expense of natural gas. The Northeast, MidAtlantic, Southeast, and Texas all saw an increase in natural gas consumption at the expense of coal, while the Central region and Florida only saw marginal changes between the two fossil fuels.

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 monthly average price of natural gas at Henry Hub decreased from the previous month, going from $4.23/MMBtu in November 2014 to $3.45/MMBtu in December 2014. The natural gas price for New York City (Transco Zone 6 NY) also saw a decrease in price from the previous month, going from $4.02/MMBtu in November 2014 to $3.31/MMBtu in December 2014, which was again, slightly below the Henry Hub price. The New York City gas price has remained well below Henry Hub for a majority of 2014 because of the growth in natural gas supply coming out of the Marcellus region, however the gas price can rise sharply during the winter months because of competing natural gas demand for both electricity and heating and constrained natural gas pipeline capacity preventing more supply from entering the region.

For the fifth consecutive month, the New York Harbor residual oil price decreased from the previous month, going from $13.48/MMBtu in November 2014 to $11.36/MMBtu in December 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 significantly compared to last month because of the decrease in the Henry Hub price. The spread between the New York City gas price and the price of Central Appalachian coal is almost nonexistent due to the decrease in New York City's gas price from the previous month.

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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