Executive Summary

Generation: Net generation in the United States dropped by 4.2 percent from October 2007 to October 2008. This was the third consecutive month that net generation was down compared to the same calendar month in 2007. The Commerce Department reported that real gross domestic product decreased from the second quarter to the third quarter of 2008, and continuing this trend, total industrial production in October 2008 as reported by the Federal Reserve was 4.1 percent lower than it had been in October 2007. This was the fourth consecutive month that same-month industrial production in 2008 declined from 2007. Net generation declined even though data from the National Oceanic and Atmospheric Administration’s (NOAA’s) population-weighted Residential Energy Demand Temperature Index (REDTI) for October 2008 was 4.3 percent “above average consumption.” October 2008 ranked as the forty-fourth coolest October on record; October 2007, in contrast, was the ninth warmest on record.

Most (69.4 percent) of the 12-month decline in October levels is attributable to the fall in coal-fired generation and 55.4 percent of the coal-fired decline can be attributed to lower coal-fired generation in five States – North Carolina, Georgia, West Virginia, Ohio, and Michigan. A decline in gas-fired generation accounted for 41.5 percent of the overall decline nationally, and two States – Texas and Florida – accounted for over half of the decline in national gas-fired generation. Nuclear generation in October 2008 was 1.8 percent higher than it was in October 2007. Net generation from conventional hydroelectric sources was 10.9 percent higher than it had been in October 2007. The largest hydroelectric generation increase was seen in Arkansas, as easing drought conditions contributed to generation that was 160.7 percent higher than it was in October 2007.

The October 2008 wind-powered generation total was 36.2 percent higher than it was in October 2007. Increases due to new wind farms in Texas, Colorado, and Minnesota account for 76.4 percent of the national increase. Petroleum liquid-fired generation was 47.6 percent lower compared to a year ago, with its overall share of net generation still quite small compared to coal, nuclear, natural gas-fired, and hydroelectric sources.

Figure 1: Net Generation by Major Energy Source: Total (All Sectors), November 2007 through October 2008

Year-to-date, net generation was down 1.1 percent from 2007 levels. Net generation attributable to coal-fired plants was down 1.0 percent. Nuclear generation was down slightly. Generation from petroleum liquids was down 41.9 percent, while natural gas-fired generation was down 2.6 percent. The October increase in conventional hydroelectric generation contributed to a year-to-date total that was up 5.6 percent. Even though wind generation totals were down in September, the rise in October wind generation contributed to a year-to-date wind generation total that was up 38.4 percent.

Coal-fired plants contributed 48.2 percent of the Nation’s electric power, year-to-date. Nuclear plants contributed 19.3 percent, while 21.6 percent was generated at natural gas-fired plants. Of the 1.1 percent generated by petroleum-fired plants, petroleum liquids represented 0.8 percent, with the remainder from petroleum coke. Conventional hydroelectric power provided 6.5 percent of the total, while other renewables (primarily biomass, but also geothermal, solar, and wind) and other miscellaneous energy sources generated the remaining 3.4 percent of electric power (Figure 2).

Figure 2: Net Generation Shares by Energy Source: Total (All Sectors), Year-to-Date through October, 2008

Consumption of Fuels: Consumption of coal for power generation in October 2008 was down by 4.5 percent compared to October 2007. For the same time period, consumption of petroleum liquids and petroleum coke decreased by 47.7 percent and 0.6 percent, respectively, while the consumption of natural gas decreased by 13.7 percent. Year-to-date, consumption of coal fell by 0.5 percent. Natural gas consumption decreased by 7.5 percent, while the consumption of petroleum liquids and petroleum coke fell by 42.5 percent and 14.9 percent, respectively.

Fuel Stocks, Electric Power Sector, October 2008

Total electric power sector coal stocks increased between October 2007 and October 2008 by 6.4 million tons. Stocks of bituminous coal (including coal synfuel) decreased by 10.1 percent, or 7.1 million tons between October 2007 and October 2008 (from 70.0 to 62.9 million tons). Subbituminous coal stocks grew by 13.5 million tons between October 2007 and October 2008 (from 76.5 to 90.0 million tons).

Electric power sector liquid petroleum stocks totaled 40.1 million barrels at the end of October 2008, a decrease of 5.1 percent (2.2 million barrels) from October 2007. October 2008 stocks were 0.9 percent (0.4 million barrels) higher than at the end of September 2008.

Fuel Receipts and Costs, All Sectors, October 2008

In October 2008, the price of coal to electricity generators maintained the August and September level, thereby breaking the recent upward trend. The downward trend in the prices of petroleum liquids and natural gas continued in October. Receipts of coal increased while receipts of petroleum liquids and natural gas declined from their September 2008 level and from their October 2007 level.

The average price paid for petroleum liquids decreased from $16.98 per MMBtu in September 2008 to $15.55 in October. This was an 8.4-percent decrease from September 2008 and a 28.8-percent increase from October 2007. Receipts of petroleum liquids in October 2008 were 3.7 million barrels, a 12.2-percent decrease from September 2008 and a 4.4-percent decrease from October 2007. The average price paid for natural gas by electricity generators in October was $6.76 per MMBtu, a 14.1-percent decrease from the September 2008 level of $7.87. The October price was 0.9 percent lower than the October 2007 price of $6.82 per MMBtu. Receipts of natural gas were 621.2 million Mcf, down 7.6 percent from September 2008 and down 3.9 percent from October 2007.

The average price paid for coal in October 2008 was $2.18 per MMBtu, which was the same price paid in August and again in September. It was 22.5 percent higher when compared with the October 2007 price of $1.78 per MMBtu. Receipts of coal were 92.7 million tons, up 4.0 percent when compared with September 2008 data and down 0.2 percent from October 2007. The overall price for fossil fuels was $3.46 per MMBtu in October 2008, an 11.5-percent decrease from September 2008, and 8.8 percent higher than in October 2007.

Year-to-date (January through October) 2008 prices compared to the same period last year were up 35.9 percent for natural gas, 85.2 percent for petroleum liquids, and 15.8 percent for coal. Year-to-date 2008 receipts compared to the same period last year were up 3.4 percent for natural gas. Year-to-date receipts for petroleum liquids and coal were down 26.5 percent and 1.9 percent, respectively.

Figure 3: Electric Power Industry Fuel Costs, November 2007 through October 2008

Sales, Revenue, and Average Retail Price, October 2008

The average retail price of electricity for October 2008 was 10.02 cents per kilowatthour (kWh), 2.8 percent lower than September 2008 when the average retail price of electricity was 10.31 cents per kWh, and 9.2 percent higher than October 2007, when the price was 9.18 cents per kWh.

The typical decrease in electricity demand due to more moderate temperatures at summer’s end continuing into October led to lower prices than in September 2008 which was lower than August 2008. Retail sales between October 2007 and October 2008 decreased 4.5 percent due to the slowing economy and comparably less cooling demand than October 2007. The average price of residential electricity for October 2008 increased 1.05 cents to 11.86 cents per kWh from October 2007 and down slightly from 11.94 cents per kWh in September 2008 and down from 12.10 cents per kWh in August 2008 when cooling demand was higher. At 11.86 cents per kWh, the average residential price of electricity increased by 9.7 percent from October 2007. These increases in the retail electricity prices are influenced by the increases in fossil fuel prices for the same period.

Sales: For October 2008, sales in the residential and industrial sectors decreased by 6.9 and 4.9 percent, respectively, while sales in the commercial sector decreased by 1.9 percent as compared to October 2007.

For the month, total retail sales were 293.1 billion kWh, a decrease of 32.3 billion kWh from September 2008, and a decrease of 4.5 percent or 13.7 billion kWh from October 2007. Year-to-date 2008, sales were 3,165 billion kWh, corresponding to a 0.2 percent increase over the same period in 2007.

Revenue: Total retail revenues in October 2008 were $29.4 billion, reflecting an increase in revenue of 4.3 percent from October 2007 and yet a $4.2 billion decrease from September 2008 reflecting continued higher prices of fossil fuels and slowing demand, respectively. Simply stated, the revenue increase year over year was related to higher fuel costs while seasonality and a slowing economy influenced demand from month to month, August to October. For October 2008, residential sector retail revenues increased 2.2 percent from October 2007, while the commercial and industrial sector retail revenues increased by 5.2 and 6.8 percent, respectively, reflecting the changes in weather. They also affect the residential consumer while yet higher fossil fuel prices affect commercial and industrial users more than weather. Year-to-date 2008, retail revenue increased to $310.6 billion, a 7.2-percent increase over the same period in 2007.

Average Retail Price: For the month, average residential retail prices slipped slightly to 11.86 cents per kWh from 11.94 cents per kWh in September 2008 although 9.7 percent higher than October 2007 when the price was 10.81 cents per kWh. The October 2008 average commercial retail price was 10.49 cents per kWh, a 7.2 percent increase from October 2007 and down slightly from 10.77 cents per kWh in September 2008. The average industrial retail price for October 2008 rose to 7.24 cents per kWh, a 12.4-percent increase over October 2007 and down slightly from 7.36 cents per kWh in September 2008. Year-to-date October 2008 residential prices have increased by 6.4 percent when compared to the same period last year and the year-to-date average retail prices for all sectors increased to 9.81 cents per kWh, or 6.9 percent over the same period. (Figure 4).

Figure 4: Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, Year-to-Date through October 2008 and 2007

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