Coal Still Dominates Winter Power Generation in Midwest Markets

Electricity generation in the Midwest is beginning to show a significant distinction, particularly for small business owners who may be wondering how energy sourcing will impact their operations and costs. The latest findings from the U.S. Energy Information Administration reveal that the Southwest Power Pool (SPP) and the Midcontinent Independent System Operator (MISO) continue to produce more electricity from coal than from natural gas during winter months. This trend has implications that small business owners should consider as they navigate their energy needs.

While national trends indicate a shift away from coal towards natural gas—especially since coal-generated electricity fell below natural gas since January 2018 in the broader U.S. context—SPP and MISO markets are bucking this trend. The upcoming winter months are forecasted to see coal generation outpace natural gas from December 2025 through February 2026. “Coal remains competitive, especially when natural gas prices are relatively high,” notes Jonathan Church, one of the principal contributors to the report.

For small businesses, these findings bring both opportunities and challenges. Understanding the dynamics of energy generation sources can help owners make informed decisions about their electricity providers and long-term contracts. Businesses reliant on seasonal heating may find themselves benefiting from stable coal prices, particularly when natural gas supply faces constraints during colder months. Factors like production freeze-offs can impact the availability of natural gas, potentially leading to fluctuations in costs for gas-fired electricity.

The increased coal reliance in SPP and MISO markets could represent a cost-effective energy source for businesses during winter. Owners in these regions might want to examine their power contracts and consider whether a reliance on coal could result in more predictable and potentially lower electricity bills, especially when they anticipate doing more business during peak heating months.

However, small business owners should also keep a close eye on the long-term market shift. Natural gas is poised to gain market share as older, less efficient coal-fired generators retire. The infrastructure for natural gas is often newer and more efficient, making it a more sustainable choice in the long run. “Much of the natural gas capacity in SPP and MISO is from the newer and relatively efficient combined-cycle units that have come online since 2000,” says Owen Comstock, a co-contributor.

Nevertheless, as companies consider transitioning to natural gas, they should also consider the potential for increased costs if natural gas prices rise. Given the past volatility in natural gas pricing, small business owners need to incorporate flexible strategies in their financial planning. Locking in energy contracts during stable periods—or seeking out service providers that offer competitive rates year-round—could mitigate the risk of skyrocketing costs during peak demand periods.

Additionally, it’s essential to be aware that the location-specific dynamics of energy generation are becoming more pronounced. While regions like California and New England have shifted almost entirely away from coal since at least 2010, SPP and MISO are clearly operating under different market conditions. This may necessitate a tailored approach for small businesses looking to harness energy solutions that best fit their operational needs.

As the landscape of energy generation becomes increasingly fragmented, the onus falls on small business owners to stay informed and adaptable. By actively monitoring trends in their specific electricity markets, business leaders can seize opportunities brought by coal’s temporary uptick while also preparing for the inevitable shift towards more modern and efficient energy sources.

For those interested in digging deeper into this data and its implications, the original report can be found here.

This article, "Coal Still Dominates Winter Power Generation in Midwest Markets" was first published on Small Business Trends

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