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

EverPower advances 126 MW Cassadaga wind power project

09/04/2015

Scoping document filed ahead of imminent project application

New York PSC wants look at grid impacts of two coal plant shutdowns

09/04/2015

Both the Dunkirk and Huntley power plants are circling the drain

FERC questions SCE on transmission line classification

09/04/2015 SCE said facilities are not currently classified as transmission and are not under operational control of the California ISO

Green Mountain Power to take state park in Vermont off power grid

09/04/2015

The project aims to turn the park into an "ePark" powered primarily by solar energy 

EIA: Small wind turbines nearing 1 GW capacity in U.S.

09/04/2015

In total, 63.6 MW of new distributed wind capacity was added in 2014 

N.M. regulators accused of chummy relations with PNM

09/04/2015

One commissioner attended a VIP tour of an Arizona nuclear power plant with executives 

Alstom to build HVDC converter stations for France-Italy transmission link

09/04/2015

Alstom will design, manufacture and commission two converter stations  

FEATURED ENERGY JOBS
View more Job Listings >>

INDUSTRY STOCKS

ON DEMAND WEBCASTS

Leveraging Intelligent Infrastructure to Achieve Your Smart City Vision

The increasing migration of the U.S. population back into urban centers brings a set of challenge...

Successfully Integrating Solar: A Proactive Approach

•      What does the increasing solar penetration mean to you as a utili...

Horizon Utilities Goes Mobile. Tablets…Then Ongoing Field Feedback Drives Success.

Horizon Utilities of Hamilton, Ontario went from paper to Tablet PCs over a 3 year period with si...

Solar + Storage: Capturing Opportunities and Overcoming Challenges

The convergence of solar and energy storage applications is under way. The combined application o...

Storage Enters the Global Stage: What’s the value proposition for your region?

For electricity storage, the events of the last two years have shown that the skepticism around t...

EL&P BUYER'S GUIDE PRODUCTS

Aurora™

Aurora™ is a proprietary blend of alumino-silicate based minerals engineered to treat a boiler's fireside system against slagging, fouling and corr...

Swage Bus Accessories

By using a compression technology process called "swaging," aluminum bus accessories can be installed without a welder. Products include bus couple...

Decontamination & Decommissioning

Decommissioning strategy development, cost estimates, plant modifications; system and building decontamination; RV segmentation; large component re...

Nuclear Horizontal Modular Storage (NUHOMS®)

AREVA TN’s NRC-licensed NUHOMS® system ensures the highest safety and lowest dose performance. With no tipping, tripping and sliding, you have the...

POWERGRID PRODUCT LISTINGS

Meyer - Engineered Poles

As your comprehensive resource for any configuration of tubular steel structure, Meyer works closely with you to develop e...

LD Poles

The standard designs and high-strength material used in the fabrication of our Light Duty steel poles insures confidence t...

Standard H-Frames

Meyer Steel Structures has compiled a database of existing steel H-frame designs that could be used to quickly meet your n...

Systems & Utility Technology Selection

BRIDGE’s utility business and functional system experts with specific experience in today’s ‘best of breed’ business syste...

POWERGRID International

July 2015
Volume 20, Issue 7
1507pg_C1

ELECTRIC LIGHT & POWER

June 2015
Volume 93, Issue 3
1505ELP_C1