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

Vattenfall orders nine Siemens wind turbines for wind power project

09/30/2014

Vattenfall has ordered nine gearless wind turbines of the type Siemens SWT-3.2-113 for its Juktan project

Schneider Electric to buy InStep Software

09/30/2014 The transaction is expected to close in the fourth quarter of 2014, subject to customary regulatory and other closing cond...

GE to equip 50 MW natural gas power plant in Colorado

09/30/2014 This agreement between Sky Global and San Bernard allows San Bernard to participate in the value of the project through it...

Itron, DTE Energy collaborate on smart city demonstration project

09/30/2014 Located at DTE Energy’s headquarters, the demonstration highlights the important role smart technologies play in managing ...

Samsung, Pattern Development sign 100 MW wind power deal in Ontario

09/30/2014 Samsung and Pattern Development will jointly develop, own and operate the Belle River Wind project, which will be built in...

Second Texas-Oklahoma 345 kV transmission project done

09/30/2014 Utility crews have finished a second 345-kV transmission line between the Texas Panhandle and Oklahoma to provide more exp...

Alstom to supply two synchronous condenser plants in Italy

09/30/2014

Alstom’s share in the contract is worth close to $37.8 million, with commissioning expected in December 2015

ON DEMAND WEBCASTS

3D BIM for Substations—Driving Efficiency from Design Through Operation and Maintenance

In this webinar, PESTECH will describe their transition to intelligent substation design and its ...

High Availability Networks. Application of IEC6439-3 Protocols for IEC61850 Process Bus implementation

Networks can now be built for the first time with genuinely uninterrupted data communication betw...

Understanding Moisture Dynamics in Power Transformers

While the need to measure moisture in power transformers has been well documented and is universa...

Regional Market Outlook for the WECC and ERCOT

Looking for an independent market outlook and analysis of the WECC and ERCOT power markets? ...

Streamline Utility Field Inspections to Improve System Reliability &  Customer Satisfaction

Arm your workers with solutions that improve productivity and customer satisfaction. Listen in an...

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...

FEATURED ENERGY JOBS

View more Job Listings >>

POWERGRID International

July 2014
Volume 19, Issue 7
1407pg-cover

ELECTRIC LIGHT & POWER

June 2014
Volume 92, Issue 3
1405ELPcvr