Electric companies seem to be speeding their switch from coal to natural gas

Utility companies are trying to predict the future of coal and natural gas, and their reckoning could have serious, damaging effects on the coal industry.

Electric companies must soon choose between building new gas-fired plants and retrofitting old coal-fired plants to meet new pollution regulations, Clifford Krauss of the New York Times writes in a story about utilities  "breaking away from coal." Over the last year and a half, at least 10 power companies have announced plans to close more than three dozen coal-burning generators by 2019, with most being replaced by gas-fired plants, Krauss reports. Frank Prager, an executive at Minneapolis-based utility Xcel Energy, told him, "It will be more cost-effective to get off coal and turn toward natural gas than it is to retrofit a lot of these facilities." Xcel has proposed replacing four or five coal-fired plants in Colorado with two gas-fired generators.

Coal still produces almost half of the country’s electric power, but gas has been gaining on it for the last decade or so, reports Krauss. Among the reasons to switch: Gas burns cleaner than coal, helping utilities meet state and corporate goals for reductions in greenhouse-gas emissions. "Older coal plants, on the other hand, require expensive upgrades, including scrubbers and other controls, to meet coming compliance rules to reduce mercury, nitrogen oxide and sulfur dioxide emissions. Energy specialists estimate that compliance with new federal regulations alone could require $70 billion of investments over the next decade for replacing or retrofitting the coal power fleet."

Another reason: Gas prices, which often fluctuate wildly, have remained at depressed levels over the last two years, while coal prices have increased by more than a third this year because of higher production costs and increased demand from China. The proliferation of gas drilling in shale fields across the country over the last five years has kept availability high and cost low. Though environmentalists tend to favor the switch to gas, some worry that more gas drilling could pollute groundwater because of the chemicals and high pressures used in breaking up deep, dense shale. (Read more)