Gas use for power generation in the United States has generally risen since 2008. The increasing gas use for power is a structural change that is occurring across a wide range of temperatures and seasons. Several factors underpin this trend, including moderate natural gas prices, increased shale gas production, and additions of natural gas generating capacity.

In 2013, natural gas use for power was down compared with 2012 levels, mainly because of higher natural gas prices. This reduction generally occurred for average daily temperatures between 40 and 80 degrees Fahrenheit, when power demand rose to levels that induced power companies to base the composition of their additional generation to meet this higher demand on relative fuel costs.

This Northeast region, which includes Ohio, Kentucky, West Virginia, Pennsylvania, and states in New England and parts of the Mid-Atlantic, experienced a high degree of coal-to-gas substitution in power generation in 2012. Growing supplies of Marcellus natural gas are increasingly competing with relatively high-cost Central Appalachia (CAPP) coal.

As natural gas prices increased between 2012 and 2013, natural gas-fired generation decreased, but it remained above the 2009-11 average throughout nearly the entire temperature range.

The Southeast was a key market for coal-to-gas substitution in 2012. At times, natural gas generating units even displaced more-efficient coal plants consuming Powder River Basin coal.

The amount of natural gas burned for electric generation was sharply lower in 2013 compared to 2012 at average daily regional temperatures above 60 degrees Fahrenheit. However, natural gas use for power in 2013 remains above the 2009-11 average for all temperatures.

Coal produced in the Midwest is generally cheaper than coal produced in the Southeast, but it is more expensive than coal produced farther west. The degree to which coal and gas compete for electric generation in this region is generally greater than in states to the west, but less than in the CAPP coal-consuming regions. Its coal mix is primarily from the relatively expensive Northern Appalachia (NAPP) coal and the mid-range priced Illinois Basin coal, whose production levels have been increasing over the past few years, in addition to Powder River Basin coal.

This coal-dominated region also saw some natural gas units displace coal generation when spot natural gas prices were extremely low in spring 2012.

Because of higher natural gas prices in 2013, natural gas consumed for power generation has been lower than in 2012 at almost all temperatures between 25 and 75 degrees Fahrenheit.

Unlike types of coal used in the Northeast, Southeast, and Midwest regions, the coal mix in Texas consists of significantly cheaper varieties, including locally mined low-grade lignite, as well as larger volumes of Powder River Basin (PRB) and Uinta Basin coal. Coal from these basins is significantly less expensive than coal from other U.S. supply sources and has lower transport costs compared with the costs of longer haul deliveries to the Mid-Atlantic and Southeast.

Compared with other regions in the United States, natural gas use for power generation has not fallen as much in 2013 compared to 2012. As gas prices increased between April 2012 and April 2013, gas-fired power did not decline significantly in 2013 below 2012 levels, since it was not competing with that region's relatively lower-cost coal-fired generation to the same degree as in other regions..