Appalachian Power coal stocks jump sharply in recent months

Appalachian Power’s coal inventories jumped sharply, from 1.45 million tons to 2.52 million tons, between the end of October 2011 and the end of April of this year, with much of the increase coming at the giant Amos plant.

Two units of American Electric Power (NYSE: AEP), Appalachian Power and Wheeling Power, on June 4 filed with the West Virginia Public Service Commission their responses to a series of questions posed by intervenor Steel of West Virginia. This came in an annual fuel cost review case. Appalachian Power is the AEP unit that owns coal-fired capacity. The steel company posed a number of questions about coal supply and contracts, with the companies in those cases saying that the information is either confidential or can be accessed by visiting a company office in Columbus, Ohio.

The steel company asked for the coal inventory levels at the end of each month in 2011 and 2012 and Appalachian Power provided them, by plant. By comparison, the total coal inventory at the end of April 2011 was 1.93 million tons, well below the 2.52 million tons of inventory at the end of April of this year. There was no narrative explanation offered about why the inventories have gotten so high. Here are the breakdowns comparing end of October 2011 and end of April 2012 stocks.

Amos (APCo share of plant): October 2011, 511,160 tons; April 2012, 1.02 million tons.

Clinch River: October 2011, 219,196 tons; April 2012, 204,342 tons.

Glen Lyn: October 2011, 44,208 tons; April 2012, 53,365 tons.

Kanawha River: October 2011, 80,419 tons; April 2012, 163,834 tons.

Mountaineer: October 2011, 496,649 tons; April 2012, 945,171 tons.

Sporn (APCo share): October 2011, 95,742 tons; April 2012, 130,477 tons.

Here are answers to various other coal questions offered by the steel company.

  • APCo has not used any form of financial hedging since Jan. 1 , 2011, because APCo has not seen market conditions or open positions that are conducive to hedging. The company does not have any planned financial hedging activities going forward regarding coal.
  • APCo normally looks to buy spot coal in any given year, but the recent history of its volatile coal consumption has reduced the likelihood that the company will buy spot coal in the near term. “At this time, it appears doubtful we will be purchasing spot coal for next year,” it said. “In the years to come, three years or more out, we anticipate spot purchases would be included in the purchase portfolio.”
  • APCo has not purchased any off-shore coal for delivery after Jan. 1, 2011.  Should any off-shore coal supply be the most advantageous when analyzing future responses to solicitations, the company could at that time make the decision to purchase off-shore coal. APCo said it has not taken any specific steps to avoid purchasing off-shore coal. This series of steel company questions on off-shore coal is somewhat misleading, since the location of APCo’s inland power plants near or within Appalachian coalfields makes purchase of off-shore coals very unlikely.
  • APCo said it has not made any payments to reduce deliveries of coal in the last 12 months.
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.