US retail power price seen falling to 7.1 cts/kWh by 2015: EIA

Washington (Platts)--12Dec2005

The average price of coal delivered to US power plants is expected to
decline "modestly" from current levels to about $1.40/MMBtu (in 2004 dollars)
by 2019 in response to "slow but continuing improvements in mine productivity"
and a continuing shift to coal from Wyoming's Powder River Basin, the Energy
Information Administration said Monday in its 2006 Annual Energy Outlook.

     The agency, the statistical arm of the Dept of Energy, said delivered
coal prices after 2019 will again begin to rise, reaching roughly $1.50/MMBtu
in 2030 as rising natural gas prices and the need for new baseload generating
capacity lead to the construction of many new coal-fired power plants.

     EIA also said coal will remain the primary fuel for generation through
2030, increasing its share of the power market from 50% in 2004 to 57% in
2030. At the same time, EIA projects that the natural gas share of the
generation market will rise from 18% in 2004 to 22% by about 2020, before
falling to 17% in 2030.

     The agency's forecast said a total of 174,000 MW of new coal-fired
generating capacity, including 19,000 MW of coal-to-liquids plants, and
140,000 MW of new natural gas-fired capacity are likely to be built between
2004 and 2030.

     The agency's report predicts that the average US delivered price of
electricity will decline from 7.6 cts/kWh (in 2004 dollars) in 2004 to a low
of 7.1 cts/kWh in 2015, largely the result of a projected softening of natural
gas prices and, to a lesser extent, weaker coal prices. After 2015, EIA said
average real electricity prices are projected to increase, reaching 7.5
cts/kWh in 2030, largely because of expected higher fuel costs.

     In addition, the annual outlook said total electricity generated from
renewable sources is projected to rise by 1.7% per year over the forecast
period, increasing from 358-bil kWh in 2004 to 559-bil kWh in 2030.

     EIA also said carbon dioxide emissions from energy use are expected to
rise at an average annual rate of 1.2% between 2004 and 2030. The carbon
intensity of the economy, measured as energy-related CO2 emissions per dollar
of GDP, will, however, decline at an average annual rate of 1.7% from 2004
through 2030, EIA added.

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http://electricityalert.platts.com.

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