Energy crisis may trigger US blackouts: Xcoal CEO

US utilities are switching away from gas and expected to burn about 23 per cent more coal this year.
US utilities are switching away from gas and expected to burn about 23 per cent more coal this year.PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The energy crisis that's led to electricity shortages and blackouts in Europe and Asia may be heading for the US.

"We've actually had discussions with power utilities who are concerned that they simply will have to implement blackouts this winter," Ernie Thrasher, chief executive officer of Xcoal Energy & Resources, said in an interview with energy research firm IHS Markit posted Thursday (Oct 7). "They don't see where the fuel is coming from to meet demand."

The global economic recovery from the pandemic has driven up demand for power, triggering shortages and higher prices for natural gas, especially in Asia. That's prompted utilities to use more coal, which is also now in short supply around the world. US utilities are switching away from gas and expected to burn about 23 per cent more coal this year.

That increased demand is bumping up against mine output that's been falling for years. The growing urgency to fight climate change has made suppliers reluctant to increase production capacity for the dirtiest fossil fuel.

But now, US utilities' stockpiles are shrinking and it's not clear whether US miners will be able to meet their increasing calls for more fuel. Power producers including Duke Energy are already warning customers that bills will spike this winter. Duke's Piedmont Natural Gas unit said Tuesday that high gas prices and low production will raise customer bills by about US$11 (S$14.95) a month in North and South Carolina. "That whole supply chain is stretched beyond its limits," Thrasher said. "It's going to be a challenging winter for us here in the United States."

A representative for Edison Electric Institute, the trade group for U.S. investor-owned electric utilities, didn't immediately respond to a request for comment. The New York State Public Service Commission is monitoring utilities in the state to ensure they have enough fuel this winter but said it expects they'll be in position to meet demand.

"The utilities have hedged approximately 70 per cent" of their residential electricity needs, which should protect against price swings, the agency said in a statement.