Executive Summary

Generation: Data from the National Oceanic and Atmospheric Administration (NOAA) show that the population-weighted Residential Energy Demand Temperature Index (REDTI) for August 2008 was 3.5 percent “below average consumption.” August 2007, in contrast, was the second warmest on record and the REDTI was about “eight percent higher than what would have occurred” under normal climatic conditions. Additionally, the Commerce Department reported that real gross domestic product decreased from the second quarter to the third quarter of 2008. The manufacturing component of the Federal Reserve’s Industrial Production Index was down 1.9 percent compared to the August 2007 value. The relatively normal 2008 weather compared to the hot August 2007 and the decline in economic activity contributed to an August 2008 net generation level that was 8.4 percent lower than it had been a year earlier.

Most (64.4 percent) of the 12-month decline in August levels is attributable to the fall in natural gas-fired generation. Gas-fired generation totals in seven States – Alabama, California, Georgia, Illinois, Mississippi, New York, and Texas – were over one million megawatthours less than they had been in August 2007. Coal generation in August 2008 was 4.9 percent lower than it was in August 2007. Drops in coal-fired generation in Pennsylvania and Ohio accounted for 36.9 percent of this decline. Net generation from conventional hydroelectric sources, however, was 3.2 percent higher. This increase happened even though the total in Washington – the State with the most conventional hydroelectric generation – was down in August 2008. The lower output from Grand Coulee – the largest power plant in the Nation – accounted for 44 percent of the Washington decrease. Petroleum liquid-fired generation was 57.1 percent lower as compared to a year ago, with its overall share of net generation still quite small compared to coal, nuclear, natural gas-fired, and hydroelectric sources. Notably, the August 2008 net generation total from liquid petroleum fuels was lower than the August 2008 wind-powered generation total. Even though wind-powered generation has decreased in recent months, wind generation was 6.3 percent higher than it was in August 2007.

Figure 1: Net Generation by Major Energy Source: Total (All Sectors), September 2007 through August 2008

Year-to-date, net generation was down 0.2 percent from 2007 levels. Net generation attributable to coal-fired plants was up less than 0.1 percent. Nuclear generation was down 0.1 percent. Generation from petroleum liquids was down 43.6 percent, while natural gas-fired generation was down 0.6 percent. Although the August value was up only 3.2 percent, conventional hydroelectric generation year-to-date was up 4.6 percent.

Year-to-date wind generation was up 44.8 percent due primarily to increased generation in Texas and Colorado. Together, these States accounted for 54.3 percent of the year-to-date national rise in wind generation.

Coal-fired plants contributed 48.3 percent of the Nation’s electric power, year-to-date. Nuclear plants contributed 19.2 percent, while 21.3 percent was generated at natural gas-fired plants. Of the 1.1 percent generated by petroleum-fired plants, petroleum liquids represented 0.8 percent, with the remainder from petroleum coke. Conventional hydroelectric power provided 6.9 percent of the total, while other renewables (primarily biomass, but also geothermal, solar, and wind) and other miscellaneous energy sources generated the remaining electric power (Figure 2).

Figure 2: Net Generation Shares by Energy Source: Total (All Sectors), Year-to-Date through August, 2008

Consumption of Fuels: Consumption of coal for power generation in August 2008 was down by 4.0 percent compared to August 2007, a decrease that was in line with the fall in generation. For the same time period, consumption of petroleum liquids and petroleum coke decreased by 58.1 percent and 17.4 percent, respectively, while the consumption of natural gas decreased by 23.9 percent.

Year-to-date, consumption of coal increased by 0.3 percent. Natural gas consumption decreased by 5.5 percent, while the consumption of petroleum liquids and petroleum coke fell by 44.1 percent and 16.1 percent, respectively.

Fuel Stocks, Electric Power Sector, August 2008

Total electric power sector coal stocks decreased between August 2007 and August 2008 by 0.1 million tons. Stocks of bituminous coal (including coal synfuel) decreased by 19.5 percent, or 13.2 million tons between August 2007 and August 2008 (from 67.7 to 54.5 million tons). Subbituminous coal stocks grew by a similar margin, 13.3 million tons, between August 2007 and August 2008 (from 69.7 to 83.1 million tons).

Electric power sector liquid petroleum stocks totaled 40.2 million barrels at the end of August 2008, a decrease of 5.6 percent (2.4 million barrels) from August 2007. August 2008 stocks were 0.6 percent (0.3 million barrels) lower than at the end of July 2008.

Fuel Receipts and Costs, All Sectors, August 2008

In August 2008, the price of coal to electricity generators increased to an all-time high (in nominal dollars) for the sixth consecutive month. The price of natural gas and petroleum liquids both decreased from July to August 2008. Receipts of coal increased in spite of the price, while petroleum liquids and natural gas receipts declined.

The average price paid for petroleum liquids decreased from $20.69 per MMBtu in July 2008 to $19.63 in August. This represents a 5.1 percent decrease from month to month, and a 103.0 percent increase over August 2007, reflecting worldwide oil pricing trends. Receipts of petroleum liquids in August 2008 were 4.5 million barrels, an 8.5-percent decrease from July 2008 and a 40.8-percent decrease from August 2007, in line with the significant price increases over this period.

The average price paid for natural gas in August was $9.11 per MMBtu, a 23.5-percent decrease from the July 2008 level of $11.90 per MMBtu. The August 2008 price increased 38.0 percent over August 2007 ($6.60 per MMBtu). However, natural gas receipts decreased only 1.9 percent from July 2008, to 835.9 million Mcf. This represents a 13.3 percent decrease from the previous year.

The average price paid for coal in August 2008 was $2.18 per MMBtu, up 3.8 percent from July 2008 and up 22.5 percent from August 2007 ($1.78 per MMBtu). Receipts of coal were 93.9 million tons, up 5.9 percent when compared with July 2008 data and down 1.6 percent from August 2007. The overall price for fossil fuels was $4.51 per MMBtu in August 2008, an 18.3 percent decrease from July 2008, but still 28.5 percent higher than in August 2007.

Year-to-date (January through August) 2008 prices as compared to the same period last year were up 40.4 percent for natural gas and 14.1 percent for coal. Year-to-date 2008 receipts compared to the same period last year were up 5.7 percent for natural gas and down 2.2 percent for coal. Year-to-date petroleum liquid receipts were down 27.2 percent, due to the 92.3 percent year-to-date increase in price.

Figure 3: Electric Power Industry Fuel Costs, September 2007 through August 2008

Sales, Revenue, and Average Retail Price, August 2008

The average retail price of electricity for August 2008 was 10.63 cents per kilowatthour (kWh), 0.5 percent lower than July 2008 when the average retail price of electricity was 10.68 cents per kWh. While the year over year August price of 10.63 cents per kWh was 9.8 percent higher than the August 2007 price of 9.68 cents per kWh, due mainly to higher fossil fuel prices, the marginal decrease month on month can be attributed to the warmer than normal July 2008 and the comparably more moderate August 2008. Retail sales for August 2008 were down versus August 2007, again due to the more moderate temperatures in August 2008 when compared to August 2007. The average price of residential electricity for August 2008 increased slightly to 12.10 cents per kWh, up from 12.09 cents per kWh in July 2008. At 12.10 cents per kWh, the average residential price of electricity increased by 9.5 percent from August 2007.

Sales: For August 2008, sales in the residential and commercial sectors decreased by 7.0 and 2.6 percent, respectively, while sales in the industrial sector decreased by 3.3 percent when compared to August 2007. For the month, total retail sales were 355 billion kWh, a decrease of 16.9 billion kWh or 4.5 percent from August 2007. August 2008 sales were 8.1 billion kWh lower than July 2008 again reflecting a comparably more moderate August 2008. Year-to-date 2008, sales were 2,546.6 billion kWh, corresponding to a 1.3 percent increase over the same period in 2007.

Revenue: Total retail revenues in August 2008 were $37.7 billion, reflecting an increase in revenue of 4.8 percent over August 2007. The data suggest that the revenue increase was related to higher fuel costs rather than increased sales. Total retail revenues for August 2008 decreased by $1.1 billion from July 2008. For August 2008, residential sector retail revenues increased 1.8 percent over August 2007, while the commercial and industrial sector retail revenues increased by 7.2 and 7.7 percent, respectively. Year-to-date 2008, retail revenue increased to $247.7 billion, a 7.8 percent increase over the same period in 2007.

Average Retail Price: For the month, the average residential retail price increased to 12.10 cents per kWh, a 9.5 percent increase over August 2007 but virtually identical to July 2008. The August 2008 average commercial retail price was 11.07 cents per kWh, a 10.1 percent increase from the August 2007 commercial sector retail price of 10.05 cents per kWh. The average industrial retail price for August 2008 rose to 7.61 cents per kWh, an 11.3 percent increase over August 2007. In August 2008, the average cost of electricity increased to 10.63 cents per kWh from 9.68 cents per kWh in August 2007. Year-to-date 2008, the average residential retail price increased to 11.21 cents per kWh, or 5.7 percent, while the overall average retail price year to date increased to 9.73 cents per kWh, a 6.5 percent increase over the same period last year. (Figure 4).

Figure 4: Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, Year-to-Date through August 2008 and 2007

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