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Electricity Monthly Update

With Data for April 2017  |  Release Date: June 23, 2017  |  Next Release Date: July 25, 2017

Previous Issues

Highlights: April 2017

  • Mild spring weather lead to low daily peak demand levels at all electricity systems across the country.
  • Robust hydroelectric production in the Northwest leads to electricity prices as low as $3/MWh at Mid-C.
  • Electricity generation from natural gas decreased in all parts of the country, mainly due to the increase in the price of natural gas that occurred over the past year.

Key indicators




Natural gas consumption for power generation decreased during winter 2016-17

Natural gas use for power generation, sometimes called power burn, decreased in the United States this past winter (November 2016 – March 2017) compared to the previous winter (November 2015 – March 2016). Total natural gas consumption for power generation fell from 4,420 trillion British thermal units (TBtu) in the winter of 15/16 to 3,908 TBtu in the winter of 16/17, an 11.6% decrease.

This fall in demand can be traced mostly to higher spot natural prices and higher electric generation from coal, conventional hydroelectric, solar, and wind plants. Despite this winter-over-winter decline in natural gas use for power, power burn during winter 16/17 still exceeded the five-year winter average (from 2010-11 through 2014-15) of 3,606 TBtu by 8.4%.

Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report

Higher natural gas spot prices were a chief factor contributing to lower natural gas power burn this past winter. The 2016-17 winter average spot price of natural gas at the Henry Hub – the national benchmark for natural gas pricing – was $2.99 per million Btu (MMBtu), up $1.01/MMBtu, or 51%, from the average winter price for 2015-16. Spot natural gas price changes this winter reflected three major weather events.

  • A sustained period of cold weather from late November through mid-December boosted residential and commercial gas demand, resulting in spot natural gas prices rising to $3.75/MMBtu, making natural gas less competitive as a fuel for power generation compared with coal.
  • In contrast, February average temperatures were the warmest of any year since 1954, leading to less demand for heating. Natural gas prices dropped to less than $2.50/MMBtu.
  • March heating degree days (HDDs) were the same as February levels, and natural gas prices topped $3/MMBtu again at the end of the month.
Source: Intercontinental Exchange price through Ventyx Energy Velocity

The average wholesale price of electric at key trading hubs rose about $3-$8 per megawatthour (MWh) this winter, mostly as a result of higher average spot natural gas prices. Natural gas tends to be the “marginal fuel” for power generation in many of parts of the country. The price for all generating units selected to run is set by the highest offer price from a dispatched unit, especially in regional transmission organizations (RTOs). As a result, higher spot natural gas prices can translate into higher offer prices, which in turn can result in reduced output from natural gas generators and increased generation from other sources, such as coal.

Between winter 10/11 and winter 15/16, natural gas generation steadily increased, largely replacing coal-fired generation. During this time, natural gas generation rose by 48.4% (from 352,925 GWh to 523,781 GWh), while coal generation fell by 39% (from 746,402 GWh to 455,139 GWs). For the first time, natural gas generation during the winter exceeded coal generation in the United States. This trend, however, was reversed this past winter, when coal generation increased by 9.5% (to 498,254 GWh), while natural gas generation fell by 13.4% to 453,486 GWh. This past winter, coal once again was the leading generation source during the winter months.

Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report

Another factor that dampened natural gas consumption and generation during winter 16/17 was the increased use of renewables, particularly conventional hydroelectric power, in the western United States. In the Pacific Continuous region (California, Oregon, and Washington), natural gas generation fell from 52,296 gigawatthours (GWh) to 43,350 GWh, or by 17.1%, between winter 15/16 and winter 16/17. In the Pacific Contiguous region, renewables output was up markedly in winter 16/17 compared with the level in Winter 15/16:

  • Conventional hydroelectric power generation increased from 54,178 GWh to 68,567 GWh (26.6%).
  • Solar generation (including both utility-scale and distributed solar) rose from 7,808 GWh to 9,760 GWh (25%).
  • Wind generation also rose from 9,772 GWh to 10,381 GWh (6.2%).
Note: Pacific continuous regiona includes the states of California, Oregon and Washington.
Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report


Principal Contributor:

Christopher Peterson
(Christopher.Peterson@eia.gov)

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