Middletown Coke Co. LLC filed a clarification June 8 with FERC that explained its relationship to coal production companies also owned by parent SunCoke Energy (NYSE: SXC).
Middletown Coke owns a new coke-production plant located at the Middletown steel works in Ohio of AK Steel, which is the off-take customer for both the plant’s coke production and the power it generates as a by-product.
On May 7, Middletown Coke submitted to the Federal Energy Regulatory Commission a petition for authority to sell ancillary services at market-based rates, a revised tariff reflecting such authority, and related waivers and authorizations. In the May 7 filing, Middletown and its affiliate, Haverhill North Coke Co., the operator of a separate coke plant in Ohio, also informed the commission of their affiliation with entities that own or control coal supplies.
“The SunCoke Companies hereby submit additional information regarding those affiliates and clarify the relationship of these entities to the SunCoke Companies,” said the June 8 filing. “In addition, as requested by Commission Staff, the SunCoke Companies are submitting this filing and the May 7 Filing attached hereto through the Commission’s e-filing system; the original May 7 Filing was submitted only through the Commission’s e-tariff system.”
The SunCoke Companies were formerly owned by Sunoco Inc. (NYSE: SUN) and were in the process of spinning off from Sunoco Inc. when Middletown submitted its application for market-based rate authorization in September 2011. During this corporate restructuring, the SunCoke Companies identified the following affiliates that own or control coal reserves in the United States: Jewell Resources Corp., Dominion Coal Corp., Jewell Smokeless Coal Corp., Jewell Coal & Coke Co. Inc., Vansant Coal Corp., Oakwood Red Ash Coal Corp., Harold Keene Coal Co. Inc., Omega Mining Inc., Energy Resources LLC and Elk River Minerals Corp.
These coal affiliates control mining rights covering proven and probable coal reserves of approximately 114 million tons, all located in Virginia and West Virginia. They own or control metallurgical coal supplies. Metallurgical coal, as distinguished from thermal coal, is used primarily for the production of coke, which is for steel-making purposes and not electric power production. Middletown and Haverhill convert the coal to coke and use the waste heat from that process to generate electricity in their Ohio cogeneration facilities. The coal affiliates are not in the business of marketing utility or thermal coal. Sales to third parties generally are limited to metallurgical coal that does not meet the quality requirements for coke production or when the amount of metallurgical coal produced exceeds the requirements of the SunCoke Companies, the June 8 filing noted.
“The SunCoke Companies hereby clarify that each of the Coal Affiliates was affiliated with Middletown when its initial request for market-based rate authorization was submitted on September 14, 2011, and that each of the Coal Affiliates except for Harold Keene, Energy Resources, and Omega were affiliated with Haverhill when Haverhill submitted its initial request for market-based rate authorization on July 14, 2008. The SunCoke Companies further clarify that each of the Coal Affiliates is a wholly owned subsidiary of SunCoke Energy, Inc. SunCoke Energy, Inc. also wholly owns Sun Coal & Coke LLC, which wholly owns the SunCoke Companies.”