For the first time since the U.S. government has been keeping statistics, natural gas and coal are neck-and-neck, each providing 32% of U.S. total net electricity generation in the month of April.
Electricity generation units run based on price, with the cheapest units operating before the more expensive ones. In general, price is based on operating costs, which is often largely impacted by fuel costs. The massive decreases in natural gas prices are making gas much more competitive with coal, causing grid-level fuel switching, as more gas-powered generation is being called and less coal generation is operating.
For all U.S. regions, net generation in the month of April 2012 decreased from the month of April 2011. Regionally, since 2011, the biggest percentage increases in gas generation use during the month of April happened in the central (134%), mid-Atlantic (65%) west (44%) and southeast (42%), with only the northeast decreasing gas generation use by a little over 4 %. Meanwhile, during the same period coal generation use dropped by 88% in the northeast, 40% in Texas, 28% in the mid-Atlantic and 27% in Florida.
Average fossil fuel spot prices from April 2011 through April 2012 showed steady declines in Henry Hub natural gas prices that ranged about $10/Mwh lower than central Appalachian coal and a little over $10/MWh more expensive than Powder River Basin Coal.
Historically high coal stocks and days of burn, a projection of coal supply based on expected run times (based on historic consumption) and current coal stockpiles, further indicates the difficulties facing the coal industry at the moment, as natural gas continues to gain market share.
Check out EIA's Electric Monthly Update for more information.