The Southern Company Services (SCS) unit of Southern Co. (NYSE: SO), as agent for Alabama Power, went out for bids April 4 on sub-bituminous coal to meet a portion of the long-term requirements of the Miller power plant.
Sealed bids will be taken until April 25, with the bids to remain valid through May 31 so SCS has time to consider them. SCS is considering the purchase of 1 million to 5 million tons per year from 2013 through 2016. The seller is requested to submit pricing based on fixed annual prices or any other pricing structure suggested by the seller. SCS wants 20% flexibility on the tonnages in scheduled shipments. It is not the intent of SCS to re-sell or re-market the flexible quantities, SCS noted.
Offers from all BNSF Railway origins, including Montana sources, will be considered. BNSF has access to all PRB mines in both Wyoming and Montana, while the Union Pacific can jointly access some of the southernmost mines in the Wyoming PRB. Miller is on the BNSF.
Offered coal must have a sulfur level no greater than 0.6 lbs/MMBtu or 1.2 lbs/MMBtu of SO2. Seller must have, at the loading point, a mechanical sampling system of “cutting the full coal stream” type or other system acceptable to purchaser in order to have the proposal considered.
Shipments must be loaded in electro-pneumatic quick dump hopper cars. Unit train shipments will be scheduled by the SCS Fuel Department after seller’s transportation coordinator has received complete purchase documentation. Seller must be prepared to load unit trains 7 days per week, 24 hours per day. Price should be quoted f.o.b. railcar at the proposed loading facility.
SCS noted that all the units at Miller now have SO2 scrubbers and going forward there will be no sulfur adjustments made for deliveries to Miller. The Alabama Power website shows that the scrubbers on the four units were brought into service in staggered order in the December 2009-January 2011 period.
Supplier bid proposals will need to include a price for car top dust treating in support of BNSF’s dust mitigation standard and a price for full-body dust treating if available. The dust costs will be used in the total $/MMBtu delivered cost analysis.
The SCS website shows Miller as a 2,640 MW plant with a typical yearly need of about 12 million tons of sub-bituminous coal.
The U.S. Energy Information Administration database shows that out of the four contracts where there were deliveries to Miller in January, three are contracts due to expire at the end of 2012. Two of the expiring contracts are with Arch Coal (NYSE: ACI) out of the Black Thunder/Jacobs Ranch mining operation in Wyoming, while the other is with Peabody Energy‘s (NYSE: BTU) North Antelope Rochelle mine in Wyoming. The fourth contract, also for North Antelope Rochelle coal, is due to expire at the end of 2014. That January coal from all four suppliers had a sulfur range of 0.2%-0.31%.