Tampa may burn 400,000 tons more coal/petcoke in 2012

Tampa Electric burned about 4.7 million tons of coal and petroleum coke during 2011 and estimates that its combined coal and petroleum coke consumption will be about 5.1 million tons for 2012, said parent TECO Energy (NYSE:TE) in its Feb. 24 annual Form 10-K report.

About 62% of Tampa Electric’s generation of electricity for 2011 was coal-fired, with natural gas representing about 38% and oil representing less than 1%. Tampa Electric used its generating units to meet approximately 94% of the total system load requirements, with the remaining 6% coming from purchased power.

The average cost for coal in 2011 was $3.46/mmBtu, up sharply from $3.08/mmBtu in 2010. The average cost per ton of coal burned in 2011 was $83.17, up from $74.80 in 2010.

The fully-scrubbed Big Bend plant, located on Tampa Bay, is the company’s primary coal facility, and burns a combination of high-sulfur coal and petroleum coke. Some low-sulfur coal and petcoke is also used as feedstock at a gasification unit at the Polk power plant.

During 2011, Tampa Electric purchased about 65% of its coal under long-term contracts with four suppliers, and about 35% of its coal and petroleum coke in the spot market. Tampa Electric attempts to maintain a portfolio of 60% long-term versus 40% spot contracts, but market conditions, actual deliveries and unit performance can change this portfolio on a year-by-year basis. Tampa Electric expects to obtain approximately 76% of its coal and petroleum coke requirements in 2012 under long-term contracts with four suppliers and the remaining 24% in the spot market.

In 2011, about 77% of Tampa Electric’s coal supply was deep-mined, approximately 12% was surface-mined and the remaining was petroleum coke. “Federal surface-mining laws and regulations have not had any material adverse impact on Tampa Electric’s coal supply or results of its operations,” the Form 10-K noted. “Tampa Electric cannot predict, however, the effect of any future mining laws and regulations.”

The Form 10-K didn’t report names of coal suppliers or contract details. On Feb. 15, Tampa Electric filed with the Florida Public Service Commission a monthly fuels report for the month of December that showed contract deliveries to Big Bend via barge from KenAmerican Resources (17,769 tons), Allied Resources (26,624 tons) and Armstrong Coal (43,513 tons) out of western Kentucky mines, and from Knight Hawk Coal (69,060 tons) out of Illinois. Spot coal suppliers in December included Patriot Coal and Peabody COALSALES. That coal was first run through a United Maritime Group transfer facility before being delivered to Big Bend. Some of this coal, while delivered to Big Bend on Tampa Bay, could also have been trucked inland to Polk.

Also, delivered in December to Big Bend via a relatively new rail unloader was contract coal from Alliance Coal, with those deliveries of western Kentucky coal broken down into two increments, 59,004 tons and 116,429 tons.