Total natural gas used for power generation in the United States was down 14% between January and July 2013 compared with the same seven month period in 2012, due primarily to higher gas prices relative to coal prices this year, according to a report issued last week by the Energy Information Administration (EIA).

“High natural gas-fired generation in 2012 occurred as a result of the lowest spot natural gas prices in a decade — in fact, the two fuels contributed approximately equal shares of total generation in April 2012,” EIA said. Still, despite lower natural gas use for generation so far this year, gas use for generation remains consistently higher than levels before 2012, according to the agency.

The decline in gas used for power generation this year has generally occurred for average daily temperatures between 40 and 80 degrees, when power demand rose to levels that induced power companies to base the fuel mix of their additional generation to meet higher demand on relative fuel costs.

Trends in gas use for power vary by region, because of differences in the availability of generating plants, generating plant age and efficiency, and the relative cost of fuels to operate power plants, EIA said.

“While natural gas prices in most parts of North America are fairly uniform, the availability and cost of coal varies more by region. In addition, coal transport costs can reflect a high portion of the overall cost of delivered fuel. In some regions, such as the Southeast and Mid-Atlantic, natural gas use for power is significantly lower in 2013. This larger drop is because natural gas made greater inroads in 2012 compared to regions like Texas, where low natural gas prices in 2012 did not displace nearly as much coal-fired generation. Fuel competition is less intense in parts of the country where coal fuels a very small portion of the generation or where the delivered coal price is extremely low, resulting in relatively greater coal consumption.”

The use of natural gas for power generation in the United States has generally risen since 2008. “The increasing gas use for power is a structural change that is occurring across a wide range of temperatures and seasons,” EIA said. “Several factors underpin this trend, including moderate natural gas prices, increased shale gas production, and additions of natural gas generating capacity.”

Natural gas has pretty much won the new-build power generation game, beating coal on economics, with a predominance of gas-fired plants to be built over the next decade, according to BNP Paribas’ Teri Viswanath, director of commodity strategy. In 2004, only about 25% of states burned at least 0.2 Bcf/d of gas to generate power; now nearly half of the states do.

The top five states for burning gas to generate power are Texas, Florida, California, New York and Alabama. A recent Federal Energy Regulatory Commission quarterly update of various regional efforts to coordinate natural gas and electric markets showed that the New England and Northeast generation markets will continue to be the most gas-dependent during the upcoming heating season.

The Environmental Protection Agency (EPA) recently issued proposed rules for greenhouse gas (GHG) emissions for new power plants, leaving gas-fired plants mostly unaffected but making construction of new coal-fired plants problematic. The proposal would come down hard on new coal-burning plants, which currently emit an average 1,768 pounds of carbon dioxide/MWh, obligating them to use carbon capture and storage technology, according to the Institute for Energy Research.

Power plants are the largest concentrated source of emissions in the United States, accounting for roughly one-third of all domestic GHG emissions, according to EPA.

The latest long-term weather forecasts don’t offer much hope for weather-related surges in demand for natural gas. In its first full fall forecast of the year, Weather Services International (WSI) last week said it expects temperatures nationally to average cooler than normal from the Northern Plains into the Ohio Valley over the next three months, with above-normal temperatures elsewhere, particularly across portions of Texas and the Southwest. And the 2013 Atlantic hurricane season, which has so far posed little threat to North American energy interests, shows no signs of heating up, WSI said.

“The lack of significant heat in the eastern United States this past summer, combined with a lackluster tropical season, have resulted in a relative lack of market-sensitive weather events compared to recent years,” said WSI Chief Meteorologist Todd Crawford.

“However, recent trends in both climate models and our statistical models are becoming more suggestive of a cold start to heating season, especially by November, across the population-rich areas of the North Central and Great Lakes states.”

Temperatures are expected to average warmer than normal over the entire country in October, except Florida, Washington and Idaho, the WSI forecasters said. That would keep weather-related natural gas demand below season norms for the month, according to Energy Securities Analysis Inc. Senior Analyst Chris Kostas.

“Assuming the forecast for mild late-autumn seasonal demand, we expect natural gas inventories will finish the injection season near 3,900 Bcf (just below last year’s historic record of 3,929 Bcf),” Kostas said.

“Delivered gas prices in the Mid-Atlantic and Northeast regions should remain subdued in October and will likely average below Henry Hub due to strong regional production levels and mild seasonal demand.”

There was 3,386 Bcf of natural gas in storage for the week ending Sept. 20, 179 Bcf less than a year earlier and 30 Bcf more than the five-year average, according to the EIA Weekly Gas Storage Report.

The relatively quiet 2013 Atlantic hurricane season and no sign of tropical activity on the horizon prompted WSI to make a significant reduction to its tropical forecast. WSI forecasters said they now expect 15 named storms to form in the Atlantic Basin, including five hurricanes, one of them major (Category 3 or higher).

While the consensus forecast had been for above-average tropical storm activity this year, WSI isn’t alone among forecasters in moderating its pre-season predictions. The National Oceanic and Atmospheric Administration (NOAA), which initially said it expected 13-20 named storms, including seven to 11 hurricanes, three to six of them major hurricanes, recently revised its forecast to 13-19 named storms and six to nine hurricanes, three to five of them major. Those forecast numbers would still make the 2013 Atlantic hurricane season more active than the seasonal average of 12 named storms, six hurricanes and three major hurricanes, NOAA said.

The Colorado State University forecasting team, which had initially estimated 18 named storms, including nine hurricanes, four of them major, recently said it now expects one less hurricane and one less major hurricane by season’s end.

“With only 30% of the season to go, 2013 has not been particularly memorable so far,” Crawford said. “Of the nine named storms so far, only two have reached weak hurricane status. Clearly, the more bullish preseason outlooks have not panned out this year, even with relatively warm tropical Atlantic Ocean temperatures and a lack of an El Nino event. The lack of instability due to warmer temperatures aloft has likely been one of the reasons for the quiet season.”

Even the reduced numbers in WSI’s latest forecast “may still be too aggressive unless the fundamental background state changes significantly,” Crawford said. “We hope to learn from this outlier season heading into 2014.”

Increased natural gas production from U.S. shale plays in recent years has lessened the potential impact of Gulf hurricanes on prices and supply.