| March 15
March 15 U.S. utilities will use more coal and
less natural gas to generate power as coal becomes cheaper and
gas more expensive, electricity traders said on Friday.
The relative price difference between NYMEX Central
Appalachian coal and NYMEX Henry Hub gas is at its
widest since June 2011 at almost $1.50 per million British
thermal units (mmBtu), according to Reuters data.
Natural gas traded at $3.87 per mmBtu on Friday morning,
while Eastern coal was selling at $2.40 per mmBtu.
Prices of Central Appalachian coal have slipped to their
lowest levels since late January.
Meanwhile, natural gas prices climbed to their highest
levels since November due to four straight weeks of
larger-than-expected drawdowns from inventories.
Energy traders, however, said some coal plants remained more
expensive than gas units by about 15 cents per mmBtu. Gas plants
are about 25 percent more efficient than coal plants, they said,
and it costs about $1 per mmBtu to transport coal from the mine
to some plants by rail, but just a few cents to transport gas by
In 2012, the price of gas, which has historically been more
expensive than coal, dropped to a more than 10-year low due
primarily to record production from shale.
Those weak gas prices depressed power prices to at least
decade lows in most regions and led generators to switch from
coal to gas plants in record numbers.
Since 2009, generators have announced plans to shut more
than 45,000 megawatts of coal-fired capacity over the next
several years as the weak power prices make it uneconomical for
them to invest in emission control equipment needed to keep the
older coal plants compliant with stricter environmental rules.
The biggest U.S. coal-fired power companies include units of
American Electric Power Co Inc, Duke Energy Corp
, Tennessee Valley Authority, Southern Co, Xcel
Energy Inc, NRG Energy Inc and FirstEnergy Corp