This study uses a 30-year panel of electricity plants to examine the short and long-run price responsiveness of coal and natural gas demand in the US electricity sector. Decisions along the extensive margin of plant fuel choice (intra-plant fuel switching) are insensitive to prices particularly in the short run. However, we find a larger price elasticity along the intensive margin when examining the quantities of fuel purchased at individual plants. This latter finding suggests that we can expect considerable reductions in coal generation under a CO2 tax. As a result, CO2 taxes are projected to reduce emissions by 31% to 40% and 46% to 64% in the short and long run, respectively relative to 2005 levels. Furthermore, the study finds that contracts to sell coal combustion byproducts are an important deterrent to plants when considering switching to cleaner fuels such as natural gas. Specifically, we find that contracts to sell coal combustion byproducts are worth roughly $20 million USD annually on average for coal-fired power plants.