Natural gas "glut" drives down U.S. wholesale electricity prices

A so-called shale-driven glut of natural gas has cut wholesale electricity prices by 50 percent in the U.S. and reduced investments in other types of generating sources.

Bloomberg reports that prices in the west hub of PJM Interconnection LLC decreased to $39/MWh by December 2011, down from $87 in the first quarter of 2008.

The article said the drop in gas prices, and the subsequent lower electricity prices, also affects power generators’ profits. Subsequently, more generators are expected to drop plans for new coal, nuclear and renewable energy projects, and be less likely to perform expensive retrofits of older coal-fired power plants with emission control systems.

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