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The EIA’s Electricity Monthly Update shows increased use of natural gas across the U.S.

Electricity generation from coal decreased in all regions of the country in March compared to the previous year, while electricity generation from natural gas increased in all regions of the country over the same period, according to the Energy Information Administration’s (EIA) Electricity Monthly Update.

Natural Gas

The change in consumption is largely due to price, says the EIA. For the fourth consecutive month, the monthly average price of natural gas at Henry Hub decreased from the previous month, going to $2.87/MMBtu in March 2015 from $2.91/MMBtu in February 2015. The natural gas price for New York City (Transco Zone 6 NY) saw a significant decrease in price from the previous month, going to $3.73/MMBtu in March 2015 from $15.40/MMBtu in February 2015, after warmer weather lowered demand.

On a dollar/MMBtu basis, Central Appalachian Coal remained cheaper than natural gas at $2.28/MMBtu, but on an equivalent energy content and efficiency basis, Henry Hub prices remained below Central Appalachian Coal prices for the third consecutive month.

Natural Gas

Gas-fired combined-cycle units tend to be more efficient than coal-fired steam units, says the EIA. Since the decrease in the Henry Hub price beginning in December 2014, it has been more economical to purchase natural gas than Central Appalachian Coal on a dollar/MWh basis. The spread on natural gas prices in New York City and coal have also been closing following the end of high demand for winter heating.

The EIA’s research note admits that the competition between coal and natural gas for electricity generation is more complex than is illustrated by price alone, with delivered prices, emissions costs, supply contract terms and many other variables required for the full picture. However, the higher efficiencies and steadily declining costs of natural gas are helping to make it the preferred choice for electrical generation nationwide.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.