Gulf Power projects low capacity utilizations for its coal units in 2013

The projected total cost of fuel to meet Gulf Power system generated power needs in 2013 is $359.9m, while the total updated cost of fuel for 2012 system needs is $369.5m, which means a 2.6% drop in fuel costs in 2013.

Total system net generation in 2013 is projected to be 0.51% higher, at 8,760,831,000 kWh, than is currently projected for 2012, said H. R. Ball, Fuel Manager for Gulf Power, in Aug. 30 testimony filed at the Florida Public Service Commission as part of an annual fuel cost proceeding. Each year at this point, Gulf Power starts to project its fuel burn and cost figures for the next year while updating its projections for the current year.

The weighted average coal burned price for 2012 is projected to be $108.14/ton. Weighted average coal burned price for 2013 is projected to be $104.88/ton. This reflects a cost decrease of $3.26/ton or 3.01%. Several of Gulf’s coal supply agreements will expire at the end of 2012 and these are being replaced with lower priced coal supply agreements, Ball noted. Gulf’s coal supply agreements have firm price and quantity commitments with the contract coal suppliers and these agreements will cover the majority of Gulf’s 2013 projected coal burn needs. The remaining coal supply needs, if any, will be purchased on the spot market.

The projected coal burn in 2013 is 2.2 million tons, with projected purchases at 2 million tons, with the difference basically coming out of coal inventory. Projected inventory of coal drops from 45 days of supply (943,652 tons) in January 2013, to 38 days (807,617 tons) in December 2013.

Gulf Power took a little over 3.3 million tons of contract coal in 2011, so the 2013 total burn projection is way below that.

In the Gulf Power projections are month-by-month coal burns in 2013 for each of its coal units, which are Crist Units 4-7, Scholz (small and little used plant), Lansing Smith and Gulf Power’s 50% ownership of two Daniel units in Mississippi co-owned with fellow Southern Co. (NYSE: SO) subsidiary Mississippi Power.

The Crist units aren’t projected to run very hard in 2013. The biggest (at 475 MW), Crist Unit 7, is projected for only a 45.3% capacity factor in 2013, with a burn of 895,775 tons of coal. Crist Unit 6 has a projected capacity factor of only 14.2%, Crist Unit 5 at 30% and Crist Unit 4 at 28%. The two Scholz units are projected at capacity factors in 2013 of 5.1% and 4.3%. The coal-fired Smith Unit 1 is projected at 39.5% and Unit 2 at 31.2%, while the gas-fired Unit 3 at Smith has a projected capacity factor of 82%. Gulf Power has said cheap natural gas is displacing coal-fired generation on its system. Daniel Unit 1 has a 2013 projected capacity factor of 22.9%, while Unit 2 is at 15.4%.

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.