Increased use of electricity to beat heat eventually could mean higher bills

Aug 6, 2010 - Elwin Green - Pittsburgh Post-Gazette - McClatchy-Tribune

Consumers striving to keep cool are helping to raise the price of coal.

Lee Hendricks, a meteorologist with the National Weather Service, said Pittsburgh's average temperature for June was 2.4 degrees above normal, and that July so far has brought six days in which the temperature was 90 degrees or higher. That is as many 90-plus days as the region usually gets in an entire summer. It's part of a heat wave that has brought triple-digit temperatures to large parts of the country.

Those temperatures have translated into increased demand for electricity as consumers crank up their air conditioners, PJM Interconnection said Monday. The agency manages the electric grid in 13 states, including Pennsylvania, plus Washington, D.C.

PJM, which measures electricity used by the hour, said last summer's peak usage was 126,805 megawatts in an hour. This summer's hourly peak already has reached 136,684 megawatts.

In July 2009, the highest demand for electricity on a day was 116,599 megawatts. So far this July, that mark has been topped on 16 different days -- including every day last week.

That higher demand, in turn, means higher prices for coal, the fuel that is burned to provide about half of the nation's electricity.

On June 1, coal traded on the New York Mercantile Exchange for $59.50 a ton. On Friday, it closed at $65.98, the highest it has been since May 2009. Coal's price already was on an upswing before the summer heat wave hit, largely propelled by burgeoning demand in China. In 2009, the world's most populous nation surpassed the United States to become the world's largest consumer of energy, according to recent data from the International Energy Agency.

For coal companies, such as Cecil-based Consol Energy, the rising prices could boost second-quarter earnings. Because companies contract to sell much of their production to power plants in advance, recent price increases are unlikely to affect consumers' electricity bills -- at least in the near term.

For instance, said Jennifer Kocher, spokeswoman for the state Public Utility Commission, Greensburg utility Allegheny Energy not only has locked in its prices through the end of the year, it already has purchased about 70 percent of the electricity it will sell to customers after, when rate caps for default electric service expire statewide.

While some of the remaining 30 percent might be generated by coal that Allegheny buys now, "statistically, it wouldn't have any influence on their price," she said.

But coal prices aren't likely to retreat as long as the heat wave continues, and Mr. Hendricks doesn't see any relief coming soon.

"It looks like we're going to be much warmer than normal at least through August," he said.

Elwin Green: egreen@post-gazette.com or 412-263-1969.