May 29 (Bloomberg) -- U.S. power plants increased natural gas use by 40 percent in March from a year earlier as low prices prompted a switch from coal, the Energy Department said today. Coal’s share fell by 20 percent.
Gas used in electricity generation rose to 703.5 billion cubic feet in March from 503.9 billion a year earlier, the department’s Energy Information Administration said today in its Electric Power Monthly. The increase represents 6.4 billion cubic feet a day of additional gas demand during the month, versus an average daily gain of 5.8 billion in February and 3.6 billion in January.
The shift from coal to natural gas among electric generators was most notable in the Southeast, Central and mid-Atlantic states.
“This trend is likely to persist in the short term as low natural gas prices make natural gas-fired generation more economical,” the department said.
Coal use fell to 57.6 million tons from 72.3 million in March 2011. Supplies “as measured by days of burn were above 80 days for the third straight month in March as declining coal consumption drove coal stockpile increases,” the department said.
Companies choose which power plants to run primarily based on their operating costs, with fuel accounting for the lion’s share, according to the department.
Power Generation Drops
U.S. power generation declined by 2.9 percent in March to 309.7 million megawatt-hours from a year earlier, department data show. Gas-fired plants accounted for 30 percent of the electricity produced during the month, up from 21 percent in March 2011, while coal’s share declined to 34 percent from 42 percent.
The average price for natural gas at the Henry Hub in Louisiana, the delivery point for New York futures, dropped for the eighth straight month, the department said. Gas at the benchmark hub averaged $2.22 per million British thermal units in March compared with $2.85 per million Btu for Central Appalachian coal, according to department data.
Natural gas futures declined 49 cents, or 19 percent, in March to $2.126 per million Btu on the New York Mercantile Exchange. Gas today fell 13.9 cents, or 5.4 percent, to settle at $2.429. Next-month futures, which are down 19 percent this year, slid to a 10-year intraday low of $1.902 on April 19.
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