HOUSTON, Jan 17 (Reuters) - Natural gas fueled just 40 percent of the electricity consumed in Texas last year, down from nearly 45 percent in 2012 as higher gas prices and rising power consumption changed generation patterns, the Texas grid operator said Friday.
Coal accounted for 37.2 percent of the power generated in Texas last year, up from 33.8 percent in 2012, while natural gas use slid to 40.5 percent from 44.6 percent, according to the Electric Reliability Council of Texas (ERCOT), the state's grid operator.
The average price of U.S. spot natural gas in 2013 rose to $3.70 per million British thermal units, up 33 percent from the 2012 average of $2.77 per million Btu, the lowest price in more than a decade, according to Thomson Reuters data.
Overall, electricity use in the state's primary electric market rose 2.1 percent in 2013 to 331,624 gigawatt-hours due to population and economic growth, ERCOT said in its annual demand and energy report. Texas set monthly power records in October, November and December.
Power use fell in Texas in 2012 for the first time since 2009, when the country was in a deep economic slump.
While 2013 electricity use rose, it was below Texas' 2011 peak of 334,000 GWh, which came in a year of record-breaking cold and heat that pushed use up by nearly 5 percent from 2010.
Predicting how much electricity Texans will use has become a topic of intense debate among state utility regulators and the grid operator as they work to address the need for more power plants in Texas.
Unlike many U.S. states, Texas continues to attract new residents and businesses. However, tight financial markets and low wholesale power prices have stalled new-plant construction.
ERCOT has warned that blackouts will be more likely as electric use grows faster than supply.
The grid agency and the Public Utility Commission of Texas (PUC) have made a number of market changes and are studying more radical changes to encourage investment in new power plants.
The debate is entering its third year. Regulators, lawmakers, power-plant owners and industrial users are divided over the issue.
ERCOT is expected to issue an updated outlook for summer power demand in February after a two-month delay for additional discussion of its load forecast methods.
In 2013, wind generation in Texas rose to 9.9 percent of electric consumption from 9.2 percent the previous year. Texas leads the nation in wind generating capacity, with nearly 11,000 MW. Wind generation may rise in 2014 as new transmission lines were completed in late 2013 to facilitate the movement of wind from rural areas of West Texas to cities.
Nuclear generation accounted for 11.6 percent of Texas consumption last year, easing from 11.8 percent in 2012.
In 2006, natural gas was burned to produce more than 46.3 percent of the power used in Texas. That figure slid to 38.2 percent in 2010, then climbed to 44 percent in 2012 as gas production from shale gas regions surged and prices fell.
Coal use in Texas was steady, accounting for 37 to 39 percent of electric production from 2005 to 2011 before losing its economic advantage to gas.
Major power producers in the state include Luminant, a unit of Energy Future Holdings, which is owned by Kohlberg Kravis Roberts & Co LP and several private equity firms; NRG Energy ; Calpine Corp ; NextEra Energy and Exelon Corp.