Energy Information Administration - 1/11/06

Generation: October 2005 net generation declined 9.7 percent from September 2005, but still exceeded October 2004 output by 0.8 percent. The increase in generation is largely due to warmer weather; cooling degree days in October 2005 were 7.2 percent greater than in October 2004.

Compared to October 2004, coal-fired generation increased 3.1 percent, generation from petroleum coke was up 5.6 percent, while nuclear generation was down 2.1 percent. Natural gas-fired generation was down 3.9 percent and conventional hydroelectric generation declined by 6.3 percent. Although hydro generation is up 1.4 percent year-to-date, hot and dry weather since mid-summer in the western United States, including the major hydroelectric producing area in the Pacific Northwest, caused the decline in October hydro output.

October generation from petroleum liquids was up 43.1 percent from last year. This sharp increase reflects increased peaking loads due to hotter weather; and fuel switching caused by the high price and tight supply of natural gas due to the Gulf Coast hurricanes.

Year-to-date total net generation (January through October 2005 compared to January through October 2004) increased by 1.8 percent. At nuclear power plants, however, generation decreased 2.3 percent, from 661.0 to 645.8 billion kilowatthours, due to a higher rate of maintenance and refueling downtime in 2005 than in 2004. Lower nuclear output has contributed to the increased usage of other fuels, particularly natural gas, up 6.9 percent year-to-date. Coal-fired generation increased 2.0 percent, from 1,644.4 to 1,677.2 billion kilowatthours. As noted above, generation at conventional hydroelectric power plants increased 1.4 percent, from 221.3 to 224.5 billion kilowatthours.

Year-to-date through October 2005, 49.5 percent of the Nation's electric power was generated at coal-fired plants (Figure 1). Nuclear plants contributed 19.1 percent, 19.2 percent was generated by natural gas-fired plants, and 2.5 percent was generated at petroleum liquid-fired plants. Conventional hydroelectric power provided 6.6 percent of the total, while other renewables (primarily wind, but also geothermal, solar, and biomass) and other miscellaneous energy sources generated the remaining electric power. Figure 2 shows net generation by month for the most recent 12 month period through October 2005.

Consumption of Fuels: Reflecting the growth in generation, fuel consumption for power generation in October 2005 increased compared to October 2004 in most cases. The following increases were recorded: coal was up 3.6 percent; petroleum liquids increased by 44.2 percent; and petroleum coke consumption rose 9.7 percent. Consumption of natural gas, however, declined by 5.0 percent.

Year-to-date, consumption of coal for electric power generation increased by 2.9 percent, natural gas consumption was up 7.0 percent, and consumption of petroleum coke increased 7.7 percent. Liquid petroleum consumption decreased by 2.0 percent year to date, due to the high price of crude oil and petroleum products.

Sectoral Distribution of Generation and Consumption of Fuels: During October 2005, 63.4 percent of electric power generation was produced at utility power plants, 33.0 percent by independent power producers (IPPs), and the remainder at industrial and commercial combined heat and power plants. Utility operated power plants consumed 74.4 percent of the coal for electric power generation, compared to 24.3 percent by IPPs. Also, utilities consumed 54.3 percent of the petroleum liquids, compared to 40.2 percent by IPPs. While utilities accounted for the largest share of coal and petroleum liquids consumption, the reverse was true for natural gas, with IPPs consuming 54.3 percent of the gas compared to 34.6 percent by utilities. The balance of coal, petroleum liquids and gas consumption is attributable to industrial and commercial plants. For the period of January through October 2005, utility power plants produced 63.0 percent of the electric power in the Nation, while IPPs contributed 33.1 percent. The remaining 3.8 percent was generated primarily by industrial combined heat and power plants (Figure 3). Year-to-date, utility operated plants consumed 74.6 percent of the coal, 33.5 percent of the natural gas, and 57.4 percent of liquid petroleum used to generate electric power. IPPs consumed 24.2 percent of the coal, 54.5 percent of the natural gas, and 36.8 percent of the liquid petroleum for electric power generation. Industrial CHP plants consumed the balance of fossil fuels for electric power generation.

Fuel Stocks, October 2005

High levels of coal-fired generation and consumption drove coal stocks 8.7 percent lower than in October 2004. Also contributing to the lower levels of coal stocks were slowdowns in rail service from the Powder River Basin.

As discussed above, petroleum liquid-fired generation and fuel consumption surged in October 2005 due to tight natural gas supply and high natural gas prices due to the Gulf Coast hurricanes. The hurricanes also disrupted the production and shipment of oil products from Gulf Coast refineries. Due to these factors, plus the reluctance of generators to rebuild fuel oil stocks at high prices, stocks of petroleum liquids (down 14.6 percent) and petroleum coke (down 20.2 percent) were significantly lower in October 2005 than in October 2004.

Petroleum liquids stocks levels in the electric power sector are, at 39.5 million barrels, very low by historical standards. Although stocks increased by 8.3 percent from September 2005, fuel oil stocks are still at one of the lowest monthly levels since the early 1970s. Electric power sector coal stocks are also low compared to historical trends. October coal stocks of 101.1 million tons, though 3.2 percent higher than in September 2005, are only slightly higher than the 2005 low set in January and are at the lowest end-of-October level since 1974.

Fuel Receipts and Costs, September 2005

The average price paid for natural gas by electricity generators in September 2005 was a record $10.58 per MMBtu (Table ES2.B.), breaking the previous record for the second consecutive month. The September 2005 price was 26.6 percent higher than the August 2005 price of $8.36 per MMBtu, and 101.1 percent higher than the September 2004 price of $5.26 per MMBtu. The average price paid for petroleum liquids was $9.14 per MMBtu in September 2005, a 14.5 percent increase when compared with the $7.98 per MMBtu price in August 2005, and 78.5 percent more than in September 2004. The average price of coal to electricity generators in September was $1.58 per MMBtu, an increase of 1.9 percent from August 2005 and up 15.3 percent from September 2004.

As shown in Figure 4, the increases in price for both natural gas and petroleum liquids, caused by the tight fuel supplies in the aftermath of the Gulf Coast hurricanes, continued to impact the overall price of fossil fuels. In September 2005, the average price for fossil fuels delivered to electricity generators was $4.00 per MMBtu, or 66.7 percent higher than September 2004 and the September 2005 price was 8.1 percent higher than for August 2005. Year-to-date through September 2005, the average price paid for natural gas by electricity generators was $7.50 per MMBtu, an increase of 28.4 percent from the same period in 2004. This increase continues to be on par with the increases in the average natural gas wellhead and city gate prices seen at the national level. As crude oil and refined petroleum prices have risen during the year, the average price of petroleum liquids delivered to electric generators has risen commensurately. Year-to-date petroleum liquid prices were $7.08 per MMBtu, an increase of $2.18 per MMBtu (the largest increase in fossil fuels) or 44.5 percent compared to the same period in 2004. Coal prices averaged $1.52 per MMBtu for the first nine months of the year, up 12.6 percent from the same period in 2004. Year-to-date, the overall price of fossil fuels was 3.06 per MMBtu, 23.9 percent higher than for the first nine months of 2004.

Retail Sales, Revenue, and Average Retail Price, October 2005

Although electricity demand in October 2005 exceeded the demand in October 2004 by 5.7 percent, total retail electricity sales decreased by 9.5 percent from September 2005, reflecting a normal seasonal pattern which occurs at the end of the summer cooling season and prior to the start of the winter heating season. As fossil fuel prices have exhibited seasonal and hurricane-induced increases, the price of electricity in October 2005 moderated by 3.5 percent, declining by 0.3 cent per kilowatthour, from September 2005, the result of significantly reduced usage of the higher priced, more expensive peaking generation.

Sales: Total retail electricity sales for October 2005 increased to 298.5 billion kilowatthours, or 5.7 percent over October 2004. Residential sales for October 2005 increased 10.5 percent over October 2004, consistent with the increase in cooling degree-days for the same period. For October 2005, electricity sales for the commercial sector were up 6.2 percent while industrial sales decreased by 0.1 percent, relative to October 2004. Year to date, electricity sales were up 3.1 percent from the same period last year.

Revenue: Electricity revenues for October 2005 increased 15.4 percent over October 2004, attributed to increased demand for electricity as well as an increase in average retail prices. As compared to October 2004, revenues for the residential sector for October 2005 increased 17.9 percent while commercial and industrial revenues were 14.8 percent and 11.8 percent higher, respectively. Year-to-date, 2005 revenues increased 8.7 percent over the same period in 2004. Average Retail Price: Average retail prices for the year continued the trend of outpacing 2004 prices. Moderate, yet steady economic growth, higher world oil prices, and extreme weather conditions contributed to the price increases. The decrease in the year-to-date availability of base-load nuclear generation and the increased usage of higher cost petroleum, coal, and natural gas, whose costs were affected by the hurricanes, were also contributing factors. In October 2005 the average retail electricity price rose 9.2 percent as compared with October 2004 to a level of 8.32 cents per kilowatthour. The residential sector increased to 9.73 cents per kilowatthour while the commercial and industrial sectors increased to 8.89 and 5.89 cents per kilowatthour, respectively, from October 2004. The 2005 average retail price of electricity from January through October 2005 was 8.08 cents per kilowatthour, 5.5 percent higher than the same period in 2004

For more information, see the Electric Power Monthly report at: http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html .