Fuel switching economics describes how the spread between natural gas and coal prices determines which fuel is more economical for power generation. When gas is cheaper relative to coal, generation shifts toward gas, pushing electricity prices lower; when gas prices rise above coal, coal-fired plants run more, often raising rates.
Past Year Trend for Fuel Switching Economics
Recent data show that fuel switching has shifted back toward coal as natural gas prices rose. According to market reports, natural gas demand for power in summer 2025 was about 3.7% lower than the previous summer as generators turned to coal when it became more economical. This decline in gas demand suggests a narrowing gas‑to‑coal price spread, which can help moderate electricity rates.
For further context on fuel market dynamics, see our Coal Prices & Availability indicator and the U.S. Energy Information Administration’s fuel switching data.