Affordable Energy for Alaska

The abundance of domestically produced coal makes it very affordable – less than one-half the price of natural gas.

The affordability of coal was noted in a study by the Massachusetts Institute of Technology:

“We believe that coal use will increase under any foreseeable scenario because it is cheap and abundant. Coal can provide usable energy at a cost of between $1 and $2 per MMBtu compared to $6 to $12 per MMBtu for oil and natural gas. Moreover, coal resources are distributed in regions of the world other than the Persian Gulf, the unstable region that contains the largest reserves of oil and gas. In particular the United States, China and India have immense coal reserves. For them, as well as for importers of coal in Europe and East Asia, economics and security of supply are significant incentives for the continuing use of coal.” (The Future of Coal, Executive Summary, pp. ix,x)

Paying BillsThe economic advantages of using coal are obvious when one considers the huge variances among the 50 states in what consumers pay for electricity. According to data from the U.S. Department of Energy (2009), the average retail price for electricity varied from a low of 6.08 cents per kilowatt hour in Wyoming to a high of 21.21 cents per kilowatt hour in Hawaii. Looking at the 12 states with the lowest average retail price, coal-fired generation is the largest single source of electric power in 9 of these states. In seven of these low-price states, coal-fired power plants provided more than three-fourths of all power generation.

In contrast, the majority of states with high-cost electricity -- including Alaska -- depend on expensive natural gas or nuclear power to meet most of their power requirements.

Coal has been used to generate electricity in Alaska for many decades. Yet it is underutilized in comparison to many other states: only about 10 percent of Alaska’s electricity comes from coal, compared to 45 percent nationwide. Most electric energy in Alaska – 59 percent – comes from burning natural gas, a resource known for volatile prices and uncertain supplies, especially in southcentral Alaska.

BurnersU.S. Department of Energy data from 2009 (the most recent annual summary available) show that Alaska had the 6th highest average retail price of electricity in the country – more than 50 percent higher than the national average. The high cost of generating power in Alaska is in large part due to the state’s heavy reliance on expensive oil and natural gas.

Alaska Coal Association, 100 Cushman Street, Suite 210, Fairbanks, AK 99701