EIA Projects Coal Generation Gains Due to Increasing Gas Prices

The increasing cost of natural gas relative to coal is expected to increase coal’s share of total generation from 37.4% in 2012 to 39.9% in 2013, according to the U.S. Energy Information Administration (EIA) April release of its Short-Term Energy Outlook (STEO). Though that would leave coal’s percentage below its 42.3% share in 2011, it indicates that gas may not be on an inevitable path to overtake a significantly greater share of the generation pie.

The STEO released April 9 projects the share of generation fueled by natural gas falling from 30.4% in 2012 to 28.0% this year, compared with a share of 24.7% in 2011.

Nuclear generation was down in 2012, averaging 2,102 GWh/day, the lowest level since 2003. The EIA pointed to extended outages last year at Turkey Point Unit 3, Fort Calhoun, and San Onofre as well as scheduled retirements of Kewaunee and Crystal River as contributing to that drop. Given delayed restarts, nuclear’s share does not look poised to gain in 2013. Though Turkey Point Unit 3 returned to service earlier this year, San Onofre is working toward a restart that, at best, would have it operating later this year at 70% power. Omaha Public Power District hopes to have the Fort Calhoun Station back online by the end of May.

The EIA expects total U.S. electricity generation to grow by 1.0% in 2013 and by 0.9% in 2014. The STEO projects that residential electricity sales this summer will be down as a result of an anticipated cooler summer (forecast cooling degree days during June, July, and August 2013 are about 11% lower than last summer and about 5% lower than the prior 10-year average).

Overall, the EIA projects the following electricity sales increases:

  • Residential electricity sales increase 0.5% during 2013 and 0.8% in 2014.
  • Retail electricity sales to the commercial sector are expected to increase by 1.0% in 2013 and by 0.8% in 2014.
  • Industrial electricity sales increase by 1.4% in 2013 and 1.2% in 2014.

As for retail electricity prices, the STEO notes that “rising costs of infrastructure upgrades continue to drive increases in residential electricity rates, although lower fuel prices in recent years have kept growth in retail rates relatively modest.” Retail rates rose 1.4% in 2012, and the EIA expects U.S. retail residential electricity prices to increase 2.8% in 2013 and 2.3% in 2014.

This story was originally published Apr. 9.
Sources: POWERnews, EIA, Omaha Public Power District

Gail Reitenbach, PhD, Managing Editor (@POWERmagazine, @GailReit)