Low Coal Stocks, Lack of Natural Gas Infrastructure May Cause Headaches for Utilities and Their Customers This Winter

November 5, 2014 DATAMARK

Let’s hope for a mild winter, because American utility companies are struggling to build up coal stocks and other fuel sources needed to power the country with electricity during the cold months, according to a recent article from Oilprice.com.

A number of factors have led to a decrease in fuel supplies, analysts say. Coal supplies took a big hit during the past winter, which was unusually long and cold in many parts of the U.S.

Additionally, coal shipments are competing for rail line capacity with a record grain harvest and the country’s recent oil boom. Oilprice.com reports that utilities are having to use trucks to move coal, and some plants have cut back on operations because of lack of fuel.

According to the latest available data from the U.S. Energy Information Administration, there are 67 “days of burn” available in bituminous coal stocks as of Aug 2014. That’s down from 84 days of burn–25 percent–during the same time last year. Subbituminous coal stocks were at 41 days of burn, down a third (62 days of burn) from a year before.

“Coal piles around the country have gotten to levels that don’t make us 100 percent comfortable,” said NRG Energy CEO David Crane in an interview with Bloomberg News.

With coal supplies tight, power plants are turning to its main fuel alternative, natural gas. Natural gas is abundant, but the problem for power plants in some regions is the lack of infrastructure to deliver it. A lack of pipeline capacity in the Northeast was a main reason why natural gas and electricity prices shot up last winter when gas-fired power plants had to compete for a limited supply of fuel.

The capacity problem hasn’t been solved yet, so this uncertainty is already being factored in to future market prices for wholesale electricity in the Northeast, according to the EIA.

To read more about the EIA’s short-term outlook for winter fuels, click this link.

The post Low Coal Stocks, Lack of Natural Gas Infrastructure May Cause Headaches for Utilities and Their Customers This Winter appeared first on Outsourcing Insights.

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