Gulf Power seeks term coal for Crist and Smith plants

Southern Company Services (SCS), the coal procurement arm of Southern Co. (NYSE:SO), went out for bids Feb. 6 on coal supply for the Crist and Smith power plants of Southern Co. subsidiary Gulf Power Co.

Sealed bids will be accepted through 5:00 pm, CDT, on Feb. 22. Gulf Power is interested in a term of up to four years beginning Jan. 1, 2013. Bids under this request for proposals (RFP) can be offered for either plant individually or as one bid for both plants.

The tonnages needed are up to 1.5 million tons per year in 2013 and 2014, and up to 1 million tons per year in 2015 and 2016. Gulf Power desires the right to adjust quantity by plus or minus 20% of the base quantity on a quarterly basis by giving 60 days notice. Price should be quoted as a fixed price for year one with a specified annual escalation (if any) for following years.

The “as received” coal specs that Gulf Power and SCS are looking for include minimums of 11,500 Btu/lb, 45 HGI and 31% volatile matter, with maximums that include 14% moisture and 9.5% ash.

“Gulf Power’s Plant Crist can utilize coal with a sulfur content of up to 3.0 lbs S02/MMBtu, however, Gulf intends to blend coals if necessary to achieve this target sulfur content,” said the solicitation. “Coal with a higher sulfur content than the target stated above may be bid but will be blended with bids of lower sulfur coals received in this RFP in the evaluation process to achieve the desired target sulfur content. Gulf Power’s Plant Smith can utilize coal with a sulfur content of up to 2.1 lbs SO2/MMBtu.”

Notable is that Crist Units 4-7 got a common SO2 scrubber into operation in late 2009, expanding the sulfur spec for coal going into those units.

Both Crist and Smith take coal by barge. For pricing quoted f.o.b. barge at the proposed loading facility, proposals must include the barge loading point name, river or waterway milepost and river or waterway that the barge loading point is located on. Coal originated via rail will also be considered under this proposal so interested parties must quote the respective rail loading point and freight district. For imported coal, SCS and Gulf want prices quoted delivered on a CIF or f.o.b. barge basis to any one or all of four terminals; McDuffie River Terminal, UBT Terminal, International Marine Terminals and Convent Marine Terminal.

Gulf Power told the Florida Public Service Commission in a Jan. 25 filing that unexpectedly cheap natural gas prices means that it is over recovering from ratepayers the costs for its fuel. The Gulf filing is more evidence of depressed natural gas prices sweeping the U.S. power markets, in some cases causing utilities to back down coal-fired generation in favor of cheaper gas-fired power. Some natural gas producers have lately announced cutbacks in production in an effort to bolster prices that in some cases have sagged below $3/mmBtu.

The projected coal burn for all of 2012 is nearly 4 million tons, with a peak burn month of 435,024 tons in August, which is a common peak burn month for a hot-summer state like Florida. The projected average coal cost for 2012 is $103.89/ton. Coal will be 70.6% of Gulf’s power generation in 2012 on a MWh basis.

The Jan. 25 filing also includes month-by-month 2012 fuel burn and capacity factors for the coal units at the Crist, Scholz and Smith power plants operated by Gulf, and also the Daniel coal plant that Gulf co-owns with another Southern Co. subsidiary. Scholz is an old, small and little-used plant.

A Jan. 31 filing with the PSC by Gulf Power breaks down November 2011 coal deliveries to Crist and Smith. The suppliers, tonnages and delivered coal prices for Crist were: West Ridge Coal Resources for Utah coal, 22,435 tons, $132.59/ton; Foresight for Illinois coal, 67,306 tons, $68.99/ton; and Patriot for West Virginia coal, 50,479 tons, $108.41/ton. For Smith, the only November supplier was Interocean Coal Sales for imported coal, with 24,277 tons of deliveries at $145.23/ton.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.