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Lowest July Power Usage in 4 Yrs. Equals Gas, Coal Demand Drops, Genscape Reports

A cooler-than-normal July for much of the United States led to decreased levels of demand for natural gas and coal to fuel power plants in a trend that is expected to continue for the rest of the summer, according to data collected by Genscape Inc.

Genscape analysts said Wednesday that recent power demand estimates show average daily demand fell 3% in July when compared to 2012. Looking at the entire month, the 404,609 GWh Genscape estimate for July is the lowest total for the month since 2009, when it recorded 372,542 GWh.

"After a slow start to the month, temperatures for much of the country warmed into the mid-month period, driving what is likely to be the summer peak demand for the Midwest and the Eastern U.S.," Genscape said. "However, the heat wave collapsed and the below average temperatures that followed for the eastern half of the United States helped to push demand rapidly downward. For the month, warmer than average anomalies were limited to the Northeast and the Western U.S."

Genscape's Generation Fuel Monitor Report revealed that coal-fired power generation was down 2% from July 2012, while natural gas was off 6% with the weaker demand. Surprisingly, despite the retirement of the Kewaunee nuclear plant in May, Nuclear generation was up 2% year-over-year, the data showed.

Despite falling natural gas use for power generation during the month of July due to cooler temperatures, current natural gas prices are higher at a vast majority of points across the country than they were one year ago, according toNGI Bidweek Survey data. Taking a sampling from across the country, deliveries at SoCal Citygate, Chicago Citygate, Transco Zone 6 NY and the Henry Hub for August 2012 Bidweek averaged $3.16/MMBtu, $3.17/MMBtu, $3.25/MMBtu and $3.01/MMBtu, respectively. For August 2013 Bidweek, those same points recorded averages of $3.81/MMBtu, $3.62/MMBtu, $3.63/MMBtu and $3.45/MMBtu, respectively.

Genscape estimated coal-fired generation accounted for 39% of supply for electricity for the month, which was in line with the year-to-date numbers. However, natural gas fired generation accounted for 32% during the month, which was up slightly from the year-to-date average of 28%.

Genscape's Generation Fuel Monitor Report (http://info.genscape.com/july-power-demand), which shows daily fuel consumption for all fuel types in the United States, is available two months in advance of Energy Information Administration estimates, according to the company.

 Looking ahead, the research and analysis firm expects the July trend to continue through the remainder of summer. "August is not likely to see a reversal of the trend, and summer demand peaks have likely passed for much of the country outside of Texas and the southwest," said Jefferson Rhoads, meteorologist and demand forecaster at Genscape. "There is some mixed risk for the West Coast given the cooler outlook for most of August, but they too have likely seen their summer peak."

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