AEP switching from gas to coal

Sponsored by

Natural gas might still win the war for U.S. power generation dominance, but at American Electric Power (NYSE:AEP), coal won the battle in the first quarter of 2013.

AEP officials said April 26 that when they were putting together their quarterly earnings presentation they noticed their usual “coal to gas switching” slide was no longer accurate.

That’s because coal power generation increased in AEP’s first quarter while gas-fired generation declined, noted AEP President and CEO Nicholas Akins.

The price of natural gas increased in the first quarter while AEP coal units were very competitive, AEP officials said. Whenever the price of gas hovers around $3.50/mmBtu, coal frequently becomes the better power option for AEP. Natural gas prices have now moved above $4, financial analysts noted during the call.

Overall AEP generation from natural gas has decreased over 30 percent year-to-date. At the same time, overall generation from coal has increased 9 percent year-to-date.

AEP coal units are typically “fully controlled” for emissions, which enables them fuel flexibility, including the ability to burn Northern Appalachian coal, AEP officials said.

In addition, AEP’s large concentration of coal-fired generation along the Ohio River gives it a big price edge over coal units that rely solely on railroad transportation for coal delivery, company officials said.

The AEP fleet had 43 days of system average coal inventory at March 31. That level of coal stockpile should make the coal units well prepared for the summer air conditioning system.

AEP officials noted that subsidiary Southwestern Electric Power (SWEPCO) has the John Turk power plant operational now. The 600 MW coal unit in Arkansas came online in late 2012.

Despite the recent good news for coal, the long-term trend still favors natural gas as AEP retires much of its older coal units due to tighter emission standards.

“We continue to transition our fleet with the retirement of over 5,500 MW,” Akins said.

AEP continues work on system changes in Ohio

“We also continue to make progress on the transition to full competition in Ohio. The Public Utilities Commission of Ohio finalized approval of our corporate separation order, and we anticipate a decision soon from the Federal Energy Regulatory Commission on our plan to fully separate our Ohio generation from our Ohio utility operations. We remain on track to complete corporate separation of our Ohio assets at the end of 2013,” Akins said.

The AEP system saw its first increase in residential growth since 2011. Likewise, unemployment in its service territory was at its lowest level since 2008, AEP said.

AEP sees its largest rate base opportunity as electric transmission and distribution, officials said.

AEP reported first-quarter earnings of $363 million or 75 cents per share, compared with $389m or 80 cents per share in 1Q 2012. Operating earnings (excluding special items) for first-quarter 2013 were $387 million or 80 cents per share, compared with 1Q 2012 operating earnings of $389 million or 80 cents per share.

“Our transmission business is delivering earnings improvement each quarter, and our performance to date this year has us on track to meet our 2013 transmission earnings goal of $0.14 per share. The positive decision last week from the Indiana Utility Regulatory Commission on the Pioneer project and the Transource Missouri settlement agreement filed earlier in April should allow us to make further progress this year on our longer-term transmission investment plan,” Akins said.

This story was originally published by GenerationHub. It is republished with permission.

Sponsored by

CURRENT ARTICLES

Appalachian Power customers set new all-time peak demand

02/27/2015 Arctic cold weather across the company’s entire service area helped push electricity consumption past the previous record ...

DOE invests $10 million in fuel cell technology

02/27/2015 The selected projects will support research and development efforts to address critical challenges and barriers for hydrog...

McCarthy says Clean Power Plan is needed — GOP leaders slam it

02/27/2015

The Clean Power Plan would reduce CO2 emissions from existing power plants by 30 percent by 2030 

Consumers Energy alerts customers to phone scam with prepaid credit card

02/27/2015 Consumers Energy is warning customers about a scam that includes a high-pressure demand for quick utility payments over th...

Vattenfall wins concession for offshore wind farm

02/27/2015

Now the company awaits approval from the Danish Parliament and EU 

Apple rumored to have hundreds working on electric vehicle

02/26/2015

If Apple does sell an electric car, it will face some competitors

New England governors look to expand renewable energy, natural gas

02/26/2015 Massachusetts Gov. Charlie Baker said the effort is part of a push to reduce energy costs, strengthen grid reliability and...

INDUSTRY STOCKS

ON DEMAND WEBCASTS

Beyond Integration: Three Dynamics Reshaping Renewables and the Grid

In a unique industry research initiative, DNV GL gathered views from over 1,600 energy sector par...

Engaging the Small and Mid-sized Business (SMB) Marketplace

This session will outline how Duke Energy leveraged Voice of Customer insights, previous experien...

When Grid Optimization is Not Enough: Making Cents of Disruptive Change.

Electric utilities today face unprecedented volatility and business challenges. To stay competiti...

Avoiding the Pitfalls of Premium Power

Premium power is an increasingly valuable tool for utilities and municipalities, who can charge m...

The Integrated Operating Model Creating an Advanced Outage Management Environment to Control the Grid

Amy Hime, Senior Manager of Engineering and Asset Systems at Enersource, will discuss the journey...

EL&P BUYER'S GUIDE PRODUCTS

MITEM Corp

Provides CRM solutions for regulated U.S. public utilities. The product, MitemView integrates differently designed systems to share critical data a...

Resources on Demand

Manages resource requests, tracks personnel movements, and supports lodging/logistics during a power restoration event.

Smart Grids

Quanta is contributing to its customers' smart grid initiatives by installing technology on power networks to provide energy management solutions f...

Horizontal Directional Drilling

With 28 small, mid-sized and large drilling rigs, Quanta Pipeline Services is one of the largest horizontal directional contractors in the world fo...

POWERGRID PRODUCT LISTINGS

EtherMate® Industrial Ethernet - IO Modules

LioN-M ProfiNet device with 16 digital I/O channels, channels can be used universally as inputs or outputs, M12 socket, ro...

Low-Smoke Zero Halogen Premise Distribution Cable

AFL’s Low-Smoke Zero Halogen (LSZH) distribution cable offers all of the benefits of a traditional 900 µm based optical ca...

OFL280 FlexTester - Handheld OTDR

AFL's OFL280 FlexTester offers an unmatched combination of fiber test functions, ease-of-use, portability, and value.

TRM® 2.0 - Test Results Manager PC Analysis and Reporting

Test Results Manager 2.0 (TRM® 2.0) is an all-in-one analysis, viewer and reporting tool designed for use with NOYES fiber...

FEATURED ENERGY JOBS

View more Job Listings >>

POWERGRID International

December 2014
Volume 19, Issue 12
1412cv

ELECTRIC LIGHT & POWER

December 2014
Volume 92, Issue 6
1411elp-cover