US 2005 power demand to rise 3.3%, coal prices seen up 14.2%: EIA

Washington (Platts)--8Nov2005

US electricity demand, spurred by a return to more normal weather
patterns and continuing economic growth, is projected to increase 3.3% in 2005
compared with 2004, the US Energy Information Administration said Tuesday in
its November Short-Term Energy Outlook.

     The projection was slightly below the 3.5% 2005 demand growth that EIA
forecast in its October outlook. EIA, however, boosted its projection of 2006
demand growth to 1.3% from the 1% it forecast in October.

     The agency based its projection on estimates that cooling and heating
demand in the third and fourth quarters of 2005 are likely to be well above
that of the same periods in 2004, which saw unusually mild weather across much
of the US.

     EIA said that when compared to 2004 figures, residential demand in 2005
rose in nine of 10 regions, while commercial demand increased in all 10
regions. Industrial demand, EIA added, fell in four of the regions along the
East Coast and Midwest.

     The agency also said the electric generation sector's demand for coal is
likely to increase 3.2% in 2005, well below the 4.5% increase it forecast in
the October outlook. EIA said it expects coal demand in 2006 to rise by 1.6%,
compared with its October projection of flat demand.

     EIA said it believes US coal production will increase 1.2% in 2005 and by
another 3.3% in 2006 as the industry ramps up to meet greater demand in
response to high natural gas and oil prices. In October, EIA projected a 2.6%
production gain in 2005 and another 1.6% in 2006.

     Coal prices, the outlook said, increased significantly in the first six
months of 2005, rising 15.3% above prices seen in the comparable period of
2004. Coal prices paid by the power sector are expected to continue to
increase in 2005, although at a slower pace than in the first half of 2005,
EIA said. 

     The agency said it expects coal prices to increase by an average of 14.2%
in 2005 and by another 3.9% in 2006, rising from $1.35/MMBtu in 2006 to
$1.60/MMBtu in 2006.

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http://electricityalert.platts.com.

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