Sept. 8, 2003 — The Energy Information Administration (EIA) has released its August report on the generation and consumption of fuels for electricity.
More comprehensive information, including charts and tables, can be found on EIA’s web site at http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html.
Generation and Consumption of Fuels.
Total generation of electric power in May 2003 declined by 1 percent compared to May 2002. Coal and nuclear generation also dropped 1 percent each compared to a year ago, while natural gas generation was down 4 percent and oil-fired generation was up 2 percent.
Year-to-date, nuclear generation is down 3 percent and natural gas generation is down 6 percent compared to 2002. The slack has been taken up by coal generation (a 4 percent increase), petroleum-fired power (a 42 percent jump) and hydroelectric power (a 4 percent increase).
During the month, 68 percent of electric power generation was produced at utility power plants, 28 percent by independent power producers, and the remainder at industrial and commercial combined heat and power plants. Utility-operated power plants consumed 79 percent of the coal for electric power generation in May 2003, compared to 20 percent by independent power producers.
While utilities accounted for the largest share of coal consumption, the reverse was true for natural gas, with independent power producers consuming 49 percent of the gas compared to 39 percent by utilities. The balance of coal and gas consumption is attributable to combined heat and power plants.
Fuel Costs and Receipts, April 2003
Spot natural gas prices fluctuated around the $5.00 per million btu (MMBtu) mark in April. This was well below the prices of $7.00 per MMBtu and higher seen during the past Winter, but nonetheless high by historical standards for the Spring shoulder period (i.e., the period between the end of the heating season and the beginning of the cooling season, during which gas prices are often low).
The relatively high natural gas prices reflected the abnormally low levels of gas in storage. At the end of April, working gas in storage stood about 52 percent below end-of-April 2002 levels and 41 percent below the previous 5-year average.
The exceptionally large shortfall in natural gas storage relative to normal levels continued to place unusually strong upward pressure on near-term gas prices because companies will need to draw large amounts of natural gas from other uses in order to refill storage for the next heating season.
Average crude oil prices for April fell about $5 per barrel from March averages. The market reacted positively to prospects for greater oil supplies from Iraq, Nigeria and Venezuela as well as OPEC’s unexpected increases in production quotas.
For example, West Texas Intermediate (WTI) spot prices averaged about $28 per barrel in April, $5 per barrel lower than the March average, and by end-April WTI prices were $12 per barrel lower than levels reached just two months earlier in anticipation of the start of the war in Iraq.
The easing of market prices described above was reflected in the fuel prices paid by the electric power industry in April 2003. The average price paid for natural gas of $5.20 per MMBtu was well below the price of $7.07 per MMBtu in March 2003. The average price paid for fuel oil also declined, from $5.46 per MMBtu in March to $4.34 per MMBtu in April. (For March 2003 price and receipts data, and April generation data, see Energy Information Administration, Electric Power Monthly, July 2003, page 3. The document can be accessed at http://tonto.eia.doe.gov/FTPROOT/electricity/epm/02260306.pdf.)
Prices nonetheless remained well above 2002 levels. The average price of natural gas to the electric power industry in April 2003 was 43 percent higher than a year earlier; fuel oil was 37 percent above the April 2002 price. Year to date, natural gas and fuel oil prices were running, respectively, 87 percent and 76 percent above comparable 2002 levels.
Receipts of natural gas in April were down 13 percent compared to the same period in 2002. Three factors likely contributed to this decline:
* The high price of gas compared to fuel oil. Continuing a pattern seen throughout early 2003, the decline in gas demand was accompanied by a large increase in purchases of fuel oil by the electric power industry. In April, fuel oil receipts were up 16 percent versus a year earlier.
* The higher efficiency of new gas-fired combined cycle plants compared to older steam electric units.
* The 2 percent decline in generation in April 2003 compared to 2002. Since many gas units are run at the margin, the decrease in generation would likely have a disproportionate impact on gas receipts.
Coal receipts in April 2003 were 2 percent higher than in the same period in 2002. For year to date compared to 2002, coal receipts were slightly down (-2 percent) and the average price was virtually flat (a 1 percent increase).
Retail Sales, Revenue, and Average Revenue, May 2003
Sales: May 2003 retail electricity sales decreased by 0.5 percent compared to May 2002. This appeared to be due in part to the weather; heating degree days were down 13 percent in May 2003 compared to a year earlier. While residential sector sales increased by 0.9 percent, the commercial and industrial sectors declined by, respectively, 0.8 percent and 1.9 percent compared to May 2002. ((For May 2003 degree day data, see Energy Information Administration, Monthly Energy Review, June 2003, page 18. The document can be accessed at http://tonto.eia.doe.gov/FTPROOT/multifuel/mer/00350306.pdf.)
* Revenue: Electricity revenues continue to show a steady increase across all sectors during May 2003, compared to May 2002. The residential, commercial, and industrial sector revenues grew by 5.1 percent, 3.6 percent, and 2.0 percent, respectively, over May 2002, accounting for a net change of 4.0 percent across all sectors.
* Average Revenue: The average revenue per kwh (a measure of price calculated by dividing revenue by sales) increased 4.4 percent over May 2002. The residential sector average price increased by 4.2 percent, commercial sector by 4.5 percent, and industrial sector by 4.0 percent over the same period in 2002. The price rise was partly due to higher fuel costs.
For more information, see the Electric Power Monthly on EIA’s web site at http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html.