Themovement in underlying fuel prices points toward generators favoring naturalgas over coal through the first quarter of the year.
Accordingto the latest data from the U.S. Energy Information Administration, coal narrowlybeat out natural gas in January to provide the majority of the nation's 350.9million MWh of utility scale generation. As total generation fell 3% versusJanuary 2015, coal-fired generation declined 14.1% over the same period to113.8 million MWh to account for 32.4% of the month's generation, while naturalgas-fired generation climbed 8% to just shy of 110 million MWh to comprise31.3% of U.S. net generation. In January 2015, coal supplied 36.6% of thenation's electricity while natural gas supplied 28.2% of generation.
Coalnarrowly toppednatural gas in 2015 generation market share in part by building an early leadas natural gas-fired generation went on to surpass that of coal during sevenmonths of the year. The EIA expects that gas-fired generation will top coal forthe first timeannually in 2016, and a sample of pipeline nomination data supports the government agency'sassertion.
DuringMarch, total electricity consumption was down in every U.S. wholesale powermarket as load curves across the board shifted lower, with PJM experiencing thelargest drop in both peak electricity demand and total electricity consumptionversus the year-ago period in March.
Amidfalling loads and declining natural gas prices, wholesale day-ahead market, orDAM, on-peak prices declined by 43.7% year over year to an average of$20.80/MWh for all regions of the U.S., according to the .That figure is down 14.9% versus the priormonth. The Northeast part of the country experienced the largest year-over-yeardeclines in average power prices, with the New York ISO and ISO New Englandseeing prices drop 57.9% and 66.8%, respectively. PJM saw DAM on-peak pricesfall 33.3% year over year to $26.84/MWh.
Spotnatural gas prices at hubs serving generators declined at a quicker pace thanwholesale power prices on a nationwide basis as they fell 51.6% year over yearto $1.675/MMBtu. In the Northeast, spot natural gas price declines were roughlyin line with those of the power market, while PJM saw the greatest differencein the pace of decline between power prices and natural gas prices.
As aresult, on-peak spark spreads, which show the difference between the marketcost of power and the cost of burning natural gas to generate power, climbedyear over year in every market but the New York ISO. Average implied heatrates, or the efficiency rate at which the market cost of power equals the costof burning natural gas to generate power, saw the largest year-over-yearincrease in PJM, as they increased 45.4% to 17,438 Btu/kWh.
Meanwhile,coal-fired implied heat rates moved in the opposite direction. Depending on thetype of coal burned, U.S. average coal-fired implied heat rates fell between41.3% and 46.4% year over year. Taking a more regional view, coal-fired impliedheat rates declined between 21.7% and 66.4%, depending on the power market andthe type of coal burned.
Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our energy commodities pages. Toview operational statistics on interstate natural gas pipelines, go to our PipelineSummary Page. To view natural gas operational flow data for receiptor delivery points, go to our OperationalCapacity by Point Page.