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Interest Rate Worries Pull the Utilities Sector Down (Part 6 of 11) (Continued from Part 5) Electricity generation
Over 90% of the coal produced in the US is used for electricity generation. The utilities segment is coal’s largest end user. As a result, coal and utility investors should watch for trends in electricity generation.
Electricity storage is expensive. Most electricity is consumed instantaneously. So electricity generation mirrors consumption. The Edison Electric Institute (or EEI) publishes generation data weekly with a lag of one week. The current report is for the week ending February 27.
Electricity production drops
Electricity generation in the US decreased marginally to 85.4 million megawatt hours (or MWh) during the week ended February 27, compared to 86.1 million MWh for the week ended February 20. However, electricity generation was 8.1% higher than the 79.0 million MWh during the corresponding week in 2014. We’ll discuss the divisional breakup in the next part of this series.
What does this mean?
Thermal coal is almost entirely used for electricity generation. As a result, a decrease in electricity generation is negative for coal producers (KOL) like Peabody Energy (BTU) and Alpha Natural (ANR)—keeping everything else constant. Moreover, in the current low natural gas price environment, natural gas may snatch up some market share from coal.
Note that weekly generation data is subject to seasonal aberrations. The impact on utilities such as AES (AES) and Southern Company (SO) depends on the regional breakup of electricity generation. We’ll have a look at this breakup in the next part of the series.
Continue to Part 7 Browse this series on Market Realist:
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Alpha Natural Resources Inc.
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CODE : ANR |
ISIN : US02076X1028 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Alpha Natural Res. is a producing company based in United states of america. Alpha Natural Res. is listed in Germany and in United States of America. Its market capitalisation is US$ 580.6 millions as of today (€ 502.5 millions). Its stock quote reached its highest recent level on July 25, 2008 at US$ 99.92, and its lowest recent point on February 19, 2021 at US$ 0.02. Alpha Natural Res. has 49 410 000 shares outstanding. |