Electricity
Electricity Monthly Update
With Data for March 2013 | Release Date: May 21, 2013 | Next Release Date: June 21, 2013
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Resource Use: March 2013
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
Net generation in the United States increased 5.3 percent compared to March 2012. The large increase in year-over-year generation was caused by record warm temperatures in March 2012, which led to a decreased need for electricity generation during that month. Temperatures in March 2013 were much closer to average, if not slightly below normal. The Southeast, Central, and MidAtlantic regions experienced the largest increases in generation compared to March 2012, as these regions saw the largest changes in temperatures from March 2012 to March 2013. For the second month in a row, all regions of the country saw an increase in electricity generation from coal except for Florida. Of the larger coal plants in Florida, Big Bend and Crystal River saw significant declines in generation from March 2012 to March 2013. Continuing the trend seen in 2013, the Northeast region had a significant increase in percentage year-over-year coal generation, while natural gas generation in the region decreased. This occurred because natural gas prices in the Northeast were significantly higher than last year. Other parts of the country, except for Florida and the Southeast, witnessed a similar trend of natural gas generation being displaced by coal generation. The West experienced a significant decrease in hydro generation, which is discussed in greater detail in the feature article of this report.
Fossil Fuel Consumption by Region
Mirroring the change in coal generation, the chart above shows that coal consumption increased in all parts of the country, except for Florida, with the Northeast experiencing the largest year-over-year percentage increase.
The second tab compares natural gas consumption in March 2012 and March 2013 by region. Again, this consumption mirrored the changes in natural gas generation, with all regions of the country, except for the Southeast, seeing decreases 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. Coal increased its share of total fossil fuel consumption in all regions of the country at the expense of natural gas. In Florida, other fossil fuels (mainly oil) also cut into natural gas's share of total fossil fuel consumption.
The fourth tab presents the change in coal and natural gas consumption on an energy content basis between March 2012 and March 2013 by region. Once again, the change in total fossil fuel use was very similar to the changes seen in total net generation in each region, with coal displacing natural gas in all regions of the country except for Florida and the Southeast.
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. In March 2013, the price of Henry Hub natural gas increased 14.5 percent from the previous month to $3.95 / MMBtu. The natural gas price for New York City (Transco Zone 6 NY) dropped dramatically from the previous two months when the price averaged above $10.00 / MMBtu. The large increases in this regional natural gas price are not uncommon during the winter months due to high demand for natural gas in an area of the country where the natural gas pipeline infrastructure is subject to significant congestion. The price of Central Appalachian coal decreased for the second consecutive month to average $2.79 / MMBtu in March 2013.
The average price of residual oil priced at New York Harbor decreased 13.2 percent from the previous month, going from $21.78 / MMBtu in February 2013 to $18.90 / MMBtu in March 2013. However, due to the significant drop in the New York City natural gas price, oil was once again priced out of the market in this region.
A fuel price comparison based on equivalent energy content ($/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. For the first time in over a year, this comparison shows that the average March 2013 price in $/MWh for Central Appalachian coal is lower than the price of natural gas at Henry Hub.
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.