The average price of natural gas delivered in the United States to electric power generators decreased to $28.16 per megawatt hour (MWh) in 2012, 28 percent below the average for 2011, according to data from the U.S. Energy Information Administration’s (EIA) Electric Power Monthly. This reflects a spread of $3.22 per MWh over the average annual price of coal delivered to the power sector in 2012, less than one-quarter of the $14.20 per MWh average spread in 2011, and just over one-fifth of the $16.49 per MWh average spread from 2009 to 2011.
During 2012 in the United States, power generation from natural gas rose by 21 percent above 2011 levels to 1,231 million MWh, while generation from coal decreased by 12 percent to 1,517 million MWh. The average ratio of power generated from natural gas to power generated from coal reached 0.81 in 2012, 39 percent above the 0.58 average ratio in 2011, and 82 percent above the 0.44 ratio in 2008, when average Henry Hub natural gas prices were more than double the annual averages seen since. For 2013 and 2014, EIA’s Short-Term Energy Outlook forecasts the gas/coal net generation ratio to come down from its 2012 level, but to stay above the level seen in 2010 as the natural gas to coal price spread increases from 2012 levels while staying below the average 2010 level.
Natural gas prices are up at most market locations, increasing most significantly at Algonquin Citygate. The Henry Hub price increased from $3.72 per MMBtu last Wednesday to $3.96 yesterday, an increase of 24 cents per MMBtu, or 6 percent. Most trading points increased between 25 and 30 cents per MMBtu week-on-week, with the notable exception of the Northeast. Transco Zone 6 NY, serving New York City, increased by 30 percent from Wednesday to Wednesday, moving from $4.17 per MMBtu to $5.43 per MMBtu. Algonquin Citygate, serving Boston markets, was substantially above Transco Zone 6 prices, rising from $8.69 per MMBtu last Wednesday to $11.57 per MMBtu yesterday, an increase of $2.88 per MMBtu. Weather in the Midwest and Northeast was cold relative to last week and relative to the historical norm.
The Nymex futures price rose week-on-week. The near-month Nymex price increased by 28 cents per MMBtu over the report period, from $3.680 per MMBtu last Wednesday to $3.960 per MMBtu yesterday. The near-month Nymex price closed below $4.00 per MMBtu on every trading day since September 2011. The 12-Month Strip (the average of April 2013 to March 2014 contracts) similarly rose over the report period, increasing by 22 cents per MMBtu and ending the week at $4.139 per MMBtu.