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Benchmarks

Unless gas prices stabilize, coal prices will continue rising.
Fortnightly Magazine - May 2004

levels. Our assessment of new base-load power plant economics indicates that coal could be an economic fuel of choice for a new base-load power plant if the price of coal delivered to a new power plant averaged at least $3/MMBtu below gas prices. If gas price volatility and dispatch considerations are included in the assessment, then coal might be more attractive than gas if coal prices were as little as $2/MMBtu below gas prices.

Given the current price differentials of more than $4/MMBtu between gas and coal, coal would remain more economically attractive than gas even if coal prices increased $1/MMBtu. Such an increase in coal prices probably would have a limited impact on electricity prices, because most of the increase in coal prices probably would shift economic rent from electricity generator to coal producer.


 

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