Electricity
Electricity Monthly Update
With Data for June 2012 | Release Date: August 24, 2012 | Next Release Date: September 26, 2012
Previous Issues of Electricity Monthly Update
Resource Use: June 2012
Supply and Fuel Consumption
In this section, we look at what resources are used to produce electricity. Electricity supplied from the grid is consumed the moment it is produced. 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 generator type and fuel type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.
Generation Output by Region
Throughout the continental United States as a whole, net generation was lower in June 2012 compared to June 2011. This occurred because many MidAtlantic and Southeastern States were much cooler in June 2012 compared to last year. The Western Region was the only area that observed a sizeable increase in net generation, as many of the Southwestern and Rocky Mountain States had significantly warmer weather compared to last June. As observed over many of the prior months, natural gas continued to increase its share as a percentage of total generation in June 2012, cutting into electricity generation usually produced at coal-fired power plants. Thus, gas-fired, combined cycle units continue to provide more electricity generation at the expense of fossil steam generators (which are primarily coal-fired).
Fossil Fuel Consumption by Region
In tandem with net generation, the chart above shows that coal consumption decreased in all parts of the continental U.S. except for the Western Region. The Southeastern, Central, and MidAtlantic regions continue to see the most significant drop in coal consumption compared to last year.
The second tab compares natural gas consumption in June 2011 and June 2012 by region. Consistent with the increase in natural gas-fired generation, natural gas consumption increased in all regions. One of the most pronounced increases occurred in West, due to greater weather related demand and a significant drop in hydro generation compared to last year.
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. Similar to trends in physical consumption, natural gas displaced coal as a percent of fossil fuel in all regions of the Nation.
The fourth tab presents the change in the relative share of fossil fuel (coal and natural gas) consumption on an energy content basis from June 2011 and June 2012 by region. Total fossil fuel use increased in the Western Region due to warmer weather and reduced hydro generation, while the rest of the country saw total fossil fuel use stay relatively the same or slightly decrease.
Fossil Fuel Prices
To gain some insight into the changing pattern of consumption of fossil fuels between June 2011 and June 2012, we look at relative monthly average fuel prices. A common way to compare fuel prices is on an equivalent $/MMBtu basis as shown in the chart above. For the first time since October 2011, the monthly average spot price for Henry Hub natural gas was higher than the monthly average spot price for Central Appalachian coal. This occurred because the price of Central Appalachian coal decreased 6.1 percent from the previous month, while the price of Henry Hub natural gas stayed relatively the same.
The average price of residual oil dropped for the third month in a row and is now 13.8 percent lower than the price of residual oil at this time last year. Regardless, it remains almost always priced out of the market in the continental United States.
A fuel price comparison based on equivalent energy content ($/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. This comparison shows that the average June 2012 price in $/MWh for Central Appalachian coal is still higher than the price of natural gas at Henry Hub for the eleventh straight month. However, the gap between the two closed even further in June 2012.
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.