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Electricity Monthly Update

With Data for January 2014  |  Release Date: Mar. 21, 2014  |  Next Release Date: Apr. 21, 2014

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Resource Use: January 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

Net generation in the United States increased 8.2 percent in January 2014 compared to the previous year. This year-over-year increase in electricity generation occurred because most states in the eastern half of the U.S. experienced significantly below normal temperatures in January 2014. This led to a significant increase in heating load compared to last year which caused increased demand for electricity generation during January 2014. The only region that experienced a decrease in electricity generation in January 2014 was the West, where the overall average temperature for many Western states was significantly above average for January. This caused the West to have a 4.4 percent decrease in electricity generation compared to last January.

For the second consecutive month, electricity generation from coal increased in all regions of the country except for the West. The change in natural gas generation was much more varied, with the Mid-Atlantic, Southeast, Florida, Central, and the West all experiencing increases in natural gas generation. The Northeast and Texas all experienced decreases in natural gas generation compared to last January. The Northeast had the largest percent change in natural gas generation, decreasing 17.2 percent compared to last January. The large decrease in natural gas generation in the Northeast can be attributed to the significantly colder temperatures experienced in January 2014, which led to a large increase in natural gas prices in the region that, on some days, effectively priced natural gas generation out of the market.

Electricity generation from nuclear plants increased in almost all parts of the country, except for in the Mid-Atlantic and Southeast where nuclear generation was down slightly from the previous year. Other fossil generators increased electricity generation in all regions of the country during January 2014, particularly in New England, the Mid-Atlantic and the Southeast. At times, it was cheaper to burn oil than natural gas.

Fossil Fuel Consumption by Region





map showing electricity regions

The chart above shows that the change in total coal consumption mirrored the change in electricity generation from coal.

The second tab compares natural gas consumption in January 2013 and January 2014 by region. This consumption pattern mirrored the change in electricity generation from natural gas, with the Northeast having the largest percent decrease in natural gas generation.

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 the Southeast, Florida, and Texas at the expense of natural gas. The only regions that saw natural gas increase its share of total fossil fuel consumption at the expense of coal was the West. The Northeast saw "other fossil fuels" (mainly petroleum) significantly increase its share of total fossil fuel consumption at the expense of natural gas, due to the colder temperatures and higher natural gas prices that occurred in the region during January 2014.

The fourth tab presents the change in coal and natural gas consumption on an energy content basis between January 2013 and January 2014 by region. Once again, the change in total coal and natural gas consumption was very similar to the change 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 increased significantly from the previous month, going from $4.38 / MMBtu in December 2013 to $4.78 / MMBtu in January 2014. The natural gas price for New York City (Transco Zone 6 NY) experienced a significant increase from the previous month, going from $6.12 / MMBtu in December 2013 to $28.02 / MMBtu in January 2014.

Increases in New York City's natural gas price are often observed during this time of year when there is an increased demand for natural gas used for heating in an area of the country where the natural gas pipeline infrastructure is subject to significant congestion. However, the high natural gas prices in the Northeast and Chicago this January were unprecedented. The December-to-January price increases were particularly large this season because of the significantly colder temperatures experienced in the regions during the month, and the natural gas price actually exceeded the price of New York Harbor Residual Oil, which was $20.49 / MMBtu in January 2014.

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. Due to the significant increase in the price for natural gas, the spread between the Henry Hub and New York City natural gas prices climbed well above the price of Central Appalachian coal on a $ / MWh basis in January 2014. The New York City natural gas price climbed above the city's residual oil price on a $ / MWh basis, and helps explain the observed increase in the use of generators that use oil to produce electricity during January 2014.

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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