Analysis: Southwest coal burn steady in April

OREANDA-NEWS. Coal burn by major utilities in the southwest US was relatively steady in April compared with a year earlier, but gas-fired generation in the region displaced power imports from neighboring balancing areas.

Coal-fired generation in the Southwest Variable Energy Resource Initiative members' territories, which cover most of Arizona and New Mexico and parts of neighboring states, averaged 4,151MW in April, down by less than 1pc from the year-earlier average. Load in the region fell by 1pc year over year, to 10,659MW.

Coal's share in regional generation fell to 44pc of the total, from 42pc in April 2014, even though the decline is small in absolute terms. The southwest utilities relied more on their own generation in April compared with 2014, but gas-fired generation accounted for most of the increase. The share of that fuel in total generation increased to 22pc in April from 17pc a year earlier. Gas generation in absolute terms rose by a third.

Installed generation in the eight-utility region met 93pc of the load, up from 88pc in April 2014.

Wholesale power markets are going through a shoulder season before rising temperatures lift cooling demand. Arizona's cooling degree days for April trailed the year-earlier level by 20pc. That measure of cooling demand was 27pc lower than the seasonal norm.

Coal is the primary generating fuel in the region but gas typically sets prices more often, on the margin. Wholesale power prices at key southwest hubs fell by about 40pc year over year, in line with declines in natural gas prices.

The decline has squeezed the marginal profitability of coal-fired generation.

The Southwest Variable Energy Resource Initiative aggregates load and generation data from eight utilities: Arizona's Generation and Transmission Cooperatives, Arizona Public Service, El Paso Electric, California's Imperial Irrigation District, Public Service of New Mexico, the Salt River Project, Tucson Electric Power and the Western Area Power Administration's desert southwest region.