UK utilities to burn more coal than gas this summer -National Grid

* Current fuel prices favour burning coal vs gas

* Average daily gas demand seen at 176 mcm vs 191 mcm/day last summer

* Nat Grid monitoring Ukraine crisis, any impact on UK gas supplies

By Nina Chestney

LONDON, April 7 (Reuters) - Utilities in Britain will burn more coal than natural gas this summer to generate electricity, National Grid (LSE: NG.L - news) said on Monday, due to low demand for gas and weak carbon and coal prices.

Excess capacity and high running costs have squeezed the profit margins of Britain's gas-fired power generators as the spark spread - the profit from burning gas to generate electricity - has remained weak.

Some operators have been forced to close plants temporarily or reduce capacity because they have been losing money.

At the same time, coal prices have fallen 20 percent over the past 12 months to under $80 a tonne, while European Union carbon prices are trading at around 5 euros a tonne, making coal economically attractive as a fuel source for utilities.

"For power generation, current fuel prices strongly favour coal burn over gas for the summer and beyond," National Grid said in its summer market outlook.

This in spite of an additional carbon tax on utilities in Britain which hurts coal generators more than gas because coal emits almost twice as much carbon dioxide when burnt for electricity generation.

National Grid expects average daily gas demand to be 176 million cubic metres over the period April to September, below actual demand of 191 mcm/day in the same period last year.

On a cold day in April, however, demand could peak at twice as much at 350 mcm/day.

National Grid said it does not assume there will be any disruption to exports of Russian gas this summer due to the Ukraine crisis but it continues to monitor the situation and assess any impact on Britain's gas supplies.

Britain receives its gas via pipelines from Norway and continental Europe through the IUK Interconnector and BBL pipes. It also receives liquefied natural gas (LNG) shipments into terminals and has gas storage.

National Grid expects around 32 billion cubic metres of gas supply this summer, with similar levels of imports from Norway and continental Europe as in recent summers but fewer LNG cargoes than in 2013.

Injections of gas into storage will be much lower than last year, as demand during the winter has been low and there has been comparatively little use of storage, it said. (Reporting by Nina Chestney, editing by David Evans)