Trend toward gas-fueled electricity hurts coal

September 25, 2018 GMT

The coal export business is doing well, but the industry still has problems here at home.

What other conclusions can you draw, especially here in West Virginia, when coal-fired power plants are producing less electricity in part because they are selling less power to neighboring states?

West Virginia has plenty of natural gas in the Marcellus Shale fields north of U.S. 50, but whatever is being used to generate electricity is going out of state.

Let’s look at a few numbers.

In the first half of this year, West Virginia’s coal-fired plants produced 30,701 megawatt hours of electricity. That was down 8 percent from the first half of last year, according to numbers compiled by the federal Energy Information Administration. Power from natural gas increased by almost 12 percent, but the total amount — 560 megawatts — was minuscule compared with coal-fired electricity.

Overall, West Virginia’s electricity production fell 7 percent in the first half. Coal accounted for about 92 percent of the state’s total production.

Meanwhile in Ohio, coal-fired electricity decreased by nearly 19 percent while total production was up about 2 percent. The difference was natural gas, which saw its power production go up about 59 percent. As coal plants in Ohio were retired from service, newer natural gas plants took their place in the market.

The situation is similar in Kentucky and Pennsylvania. Coal-fired power is on the decline and gas-fired power is on the rise.

If you look at individual plants in this area, the story is similar. Production at the John Amos Power Plant in Putnam County was down 23 percent in the first half, while the Gavin plant near Gallipolis, Ohio, saw a 26 percent decrease. However, the Mountaineer plant in Mason County, W.Va., saw a 15 percent increase, although it is not as large as either Gavin or Amos.

Numbers were incomplete for the gas-fired plants in our area, but the ones that were available showed that the plant at Hanging Rock, Ohio, near Ironton saw a 31 percent increase. The Ceredo plant in Wayne County and the Riverside Generating plant near Louisa, Ky., also saw increases.

Why is coal losing to natural gas? Price, of course. Generating power with natural gas is less expensive than with coal at the current prices low for gas.

What does this mean for the average person in West Virginia? According to a report from the Public Service Commission to the Legislature in June, West Virginia’s reliance on coal served the state well in the past, but “rising coal prices translate directly into higher electricity prices in West Virginia because of our nearly 100 percent reliance on coal.”

West Virginia’s power plants have experienced what the PSC calls “a significant loss” of off-system profits in recent years. Before, the state’s power plants sold excess capacity to customers in other states. But as older coal plants were retired and as new gas plants elsewhere came on line, there is less demand for West Virginia’s higher-priced electricity, according to the PSC.

Also, West Virginia’s utilities invested nearly $3 billion in pollution control equipment in the past decade. Those systems are expensive to operate, and they consume large amounts of power themselves, which further increases the cost of generating power, the PSC report said.

While West Virginia’s electricity rates have gone up, they are still competitive for the most part with those in neighboring states, the PSC said. For now. As Ohio and Kentucky add more gas-fired power to their systems, West Virginia lags in taking advantage of the gas fields up in the northern part of the state.

The coal fleet is aging. Utilities and independent generators aren’t interested in replacing old coal plants with new ones. Whether coal’s days as a power source are numbered is yet to be seen, but that possibility must be prepared for.

Jim Ross Is opinion page editor of The Herald-Dispatch. He can be contacted at jross@herald-dlspatch.com.