Luminant hit with sharp drop in coal generation in Q1

The competitive electric segment of Energy Future Holdings was hit with a 23% decrease in lignite/coal-fueled production in the first quarter that was driven by an increase in economic backdown and unplanned outage days in 2012, while nuclear-fueled production increased 3% reflecting no outage time in 2012.

Energy Future Holdings also reported in its May 1 Form 10-Q report that in the competitive electric segment, retail electricity revenues decreased $276m, or 23%, to $927m due to a 23% decline in sales volumes reflecting decreases in both the residential and business markets. Residential volumes declined 22% reflecting milder winter weather and an 8% decrease in customer counts driven by competitive activity.

A 31% decrease in heating degree days drove a 15% decline in average volume per residential customer. A 25% decline in business market volumes reflected a change in customer mix and lower customer counts. Overall average retail pricing was essentially flat to 2011.

Fuel, purchased power costs and delivery fees decreased $202m, or 24%, to $628m in the first quarter of 2012. Lignite/coal fuel costs decreased $62m reflecting increased economic backdown and an increase in unplanned outage days due to equipment failures, partially offset by increased coal, lignite mining and nuclear fuel costs.

The competitive electric side of the company is the Energy Future Holdings Corp. business segment that consists principally of Texas Competitive Electric Holdings Co. LLC, which is engaged in electricity generation and wholesale and retail energy markets activities, and whose major subsidiaries include Luminant and TXU Energy.

Luminant had 10,693 GWh of coal-fired generation in the first quarter, down sharply from 13,966 GWh in the year-ago quarter.

The Feb. 21 Form 10-K report of Energy Future Holdings said that Luminant has 8,017 MW of installed nameplate lignite/coal capacity at five sites and within 12 units. “Nuclear and lignite/coal-fueled units are generally scheduled to run at capacity except for periods of scheduled maintenance activities; however, we reduce production from certain lignite/coal-fueled generation units during periods when wholesale electricity market prices are less than the unit’s production costs (i.e., economic backdown),” said the Form 10-K. “The natural gas-fueled generation units supplement the nuclear and lignite/coal-fueled generation capacity in meeting consumption in peak demand periods as production from a certain number of these units can more readily be ramped up or down as demand warrants.”

Luminant’s lignite/coal-fueled generation fleet consists of the Big Brown (2 units), Monticello (3 units), Martin Lake (3 units), Oak Grove (2 units) and Sandow (2 units) plant sites. Over the last three years, the total annual scheduled and unscheduled outages per unit (excluding three recently constructed units) averaged 31 days. Luminant’s lignite/coal-fueled generation fleet operated at a capacity factor of 83.5% in 2011, 82.2% in 2010 and 86.5% in 2009, which represents top decile performance of U.S. coal-fueled generation facilities. This performance does reflect increased economic backdown, the Form 10-K said.

Luminant meets its fuel requirements at Big Brown, Monticello and Martin Lake by blending locally-mined lignite with sub-bituminous coal from the Powder River Basin in Wyoming. The coal is purchased from multiple suppliers and is transported from the Powder River Basin by railcar.

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.