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Electricity Indicators That Affect Coal and Power Utilities (Part 1 of 3) Electricity production
More than 90% of the coal produced in the United States is used for electricity generation. The utilities segment is coal’s largest end user. As a result, coal and utility investors should watch for a trend in electricity generation.
Electricity storage is expensive. Most of the produced electricity is consumed instantaneously. Thus, electricity generation mirrors consumption. Edison Electric Institute (or EEI) publishes the generation data on a weekly basis with a lag of one week. The current report is for the week ending March 27.
Electricity production falls marginally
Electricity production in the United States increased marginally to 70.9 million megawatt hours (or MWh) during the week ending March 27 compared to 70.5 million MWh for the March 20 week. However, electricity generation was also lower than 72.7 million MWh during the same week in 2014. We’ll talk more about divisional breakup in the next part of this series.
What does this mean?
Thermal coal is almost entirely used for electricity generation. A decrease in electricity generation is thus negative for coal producers (KOL) such as Peabody Energy (BTU) and Alpha Natural Resources (ANR), keeping everything else constant. Moreover, in the current low natural gas price environment, natural gas may snap market share from coal.
Note that the weekly generation data are subject to seasonal aberrations. The impact on utilities such as AES Corp (AES) and Southern Company (SO) depends on regional breakup of electricity generation. We’ll have a look at that in the next part.
Continue to Part 2 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. |