New Problems for Coal-Fired Power … And PATH

The collapse of US manufacturing has changed the face of the US coal industry.  There is falling US demand for steam coal (to produce electricity) and metallurgical coal (to make steel).  This is beginning to look like a long term trend.  Here is a link to an AP article today explaining current trends.

We are entering a period of rising coal prices, driven by coal exports, and lower natural gas prices.  In the last year, there has been a dramatic shift in electrical power production from coal to natural gas.  Coal is now producing less than 47% of all electricity consumed in the US.  Just two years ago, this figure was more than 50%.  There is further discussion of coal/natural gas differences on The Power Line here.

Natural gas is used primarily for domestic heating, cooking and electricity production because the US has no capability to export natural gas.  Coal is easily exported, so domestic coal prices are influenced much more by international markets.  There is basically no basic steel industry in the US anymore to use US metallurgical coal.  That is not true of Asia, where steel production is rising again, pulling US coal export prices higher.

US coal producers have shifted their production from steam coal to metallurgical coal and supplies of steam coal in the US are falling.  As steam coal supply falls, prices rise for steam coal as well as metallurgical coal.

WV electricity users have seen this trend recently as both AEP and Allegheny Energy asked for, and got, rate increases of more than ten percent from the WV PSC.  AEP has made it clear that it will return to the PSC for the next two years for similar increases.

PJM Interconnection’s argument for PATH and TrAIL is based on low coal prices and rising peak demand on the east coast.  The huge new power lines make even less sense now that it is much cheaper for east coast power companies to build and operate their own natural gas fired power plants.

John Howley reports here that:

The falling trend of Maryland’s net imports of electricity provides little support for the nightmare vision of impending blackouts and brownouts. Maryland’s power imports fell from 24,715 GWh in 2003 to 20,505 in 2007. The severe economic recession of the past year has likely reduced imports further.

As it turns out, MD didn’t even need PATH even before the current economic collapse.  4 gigawatt hours of power is a lot of electricity.  When they do need it again, natural gas will be the choice to generate it, not imports of coal fired power along huge power lines.