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Natural gas edges past coal to become top U.S. electricity source

Workers on the American Electric Power Co.'s AEP Leader towboat tighten down lines connecting 15 barges together holding 30,000 tons of coal before making their way down the Ohio River in West Virginia, U.S., on Tuesday, Oct. 23, 2012.

Ty Wright/Bloomberg

Natural gas overtook coal as the top source of U.S. electric power generation for the first time ever earlier this year, a milestone that has been in the making for years as the price of gas slides and new regulations make coal more risky for power generators.

About 31 per cent of electric power generation in April came from natural gas, and 30 per cent from coal, according to a recently released report from the research company SNL Energy, which used data from the U.S. Energy Department.

A drilling boom that started in 2008 has boosted U.S. natural gas production by 30 per cent and made the United States the world's biggest combined producer of oil and natural gas. Hydraulic fracturing has allowed energy companies to tap huge volumes of gas trapped deep underground in shale formations.

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At the same time, power companies have been installing more natural gas turbines at plants. They have long switched between natural gas and coal, depending on commodity prices. However, new regulations that restrict the emission of greenhouse gasses has added new pressure to make the switch.

Power companies are making plants more flexible and retiring older coal-fired facilities.

Price and regulatory changes have begun to play out in usage data.

Federal data shows that in April, the amount of electricity generated with natural gas climbed 21 per cent compared to April 2014, while the amount generated with coal fell 19 per cent.

The amount of coal and gas used will continue to vary depending on price.

The U.S. Energy Department said in a May report that it expects the level of coal-generated electricity to rebound as natural gas prices rise and coal-fired plants return from spring maintenance.

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