The agency said of all of the nation’s regions, the southeast states were showing the biggest shift of coal to natural gas in overall generation levels as well as relative fuel mix.
It attributed lower natural gas prices, highly efficient natural gas-fired generator concentrations and a high shipping cost for coal from production regions to the changes.
Three large and vertically integrated utility systems make up the region, tied together with many smaller service territories and, while the systems do not dispatch or run generation units through auctions, all still generally choose which units to run based on cost.
“Electric units that are fired by all types of coal were backed down during the spring of 2012, when natural gas prices in the region were at their lowest point in a decade,” the EIA said.
“Coal-fired generation rebounded modestly in 2013 as natural gas prices rose above their 2012 levels but coal is still contributing less than 50% of regional generation this year, which is a dramatic shift from 2001-09.”
As the agency noted, the southeast’s power plants are as much as 1600 miles away from the Powder River Basin, the origin of much of the nation’s most cost-efficient coal.
Moreover, those facilities have traditionally used both that resource and central Appalachian tonnage to serve their needs.
“Although they are volatile at times, natural gas prices as delivered to electric power plants in the southeast have been hovering at or below $4 per million British thermal units since 2011,” the EIA said in its report, adding that delivered coal prices had meanwhile been holding steady or rising since 2003.
“Natural gas-fired units have been able to take advantage of lower prices, leading to the drop in coal-fired output in the region.”
It noted that the southeast US was also home to a high concentration of efficient natural gas combined-cycle plants, so the region could take advantage of the lower natural gas prices to displace large amounts of coal-fired generation.