OREANDA-NEWS. The share of coal generation in the power mix of the largest US wholesale market in April fell to its lowest level in recent years as a deadline for meeting federal mercury and air toxics rules took effect.

Electricity generated by coal plants in the PJM Interconnection fell to 34pc of the total market from 44pc in April 2014, based on data compiled by the Generation Attribute Tracking System used by participants in the renewable energy credit markets. Coal generation in absolute terms appears to have fallen by 30pc from a year earlier.

April is the latest month for which generation data are available through the renewable tracking platform. PJM's market monitor typically releases aggregated generation statistics on a quarterly basis, with a two-month lag.

The share of natural gas in total generation rose to 22pc in April from 14pc a year earlier, while nuclear plants' share increased to 38pc from 36pc. Total generation in April was 7.7pc lower than a year earlier because milder weather translated into a below-average heating load.

The Environmental Protection Agency's mercury rules went into effect on 16 April, and many operators decided to shut the units rather than install costly updates. About 8GW of capacity shut down this year in PJM and another 3.2GW will shut down in 2016-20, according to Argus' coal plant retirement database. Only 2GW of new coal-fired capacity is in the PJM interconnection queue.

As a result of the retirements, PJM coal capacity slipped below installed gas-fired generation for the first time. In May, the grid operator had 55GW of gas capacity, compared with 51GW for coal.

Dispatch economics in April also favored gas units over coal. Mid-Atlantic natural gas prices that month were at a discount of about 50pc to second quarter Central Appalachian rail deliveries. Spot natural gas prices at the Tetco zone M-3 hub, a PJM mid-Atlantic benchmark, averaged \$1.72/mmBtu in April.

Coal plants in April accounted for 51pc of marginal resources while gas units set the locational marginal prices in 40pc of real-time dispatch intervals, based on PJM market monitor's data.

PJM coal units scheduled for retirement in 2015-20 generated 5,958 GWh in the first quarter, Energy Information Administration data show. Fuel burn by those units totaled 2.56mn short tons (2.32mn metric tonnes) over the period.

July-August 2015 peak hour dark spreads in PJM's mid-Atlantic region trail gas sparks spreads by 22pc.

Coal plant owners expect PJM's next forward capacity auction to boost revenue, albeit with a three-year lag. The auction, which will start on 10 August, covers the June 2018-May 2019 period. Federal regulators this week approved a major reform of capacity market rules that should mean more revenue for coal and nuclear units and other baseload generation with firm fuel supply arrangements.