Cloud Peak contract for Hoot Lake expires at the end of 2012

Otter Tail Power has a contract with Cloud Peak Energy Resources LLC for sub-bituminous coal through Dec. 31, 2012, for the Hoot Lake plant that provided for all of the plant’s coal needs in 2008-2011 and is expected to provide for all the plant’s coal needs in 2012.

Included in this Cloud Peak contract is the ability to carry forward tons to future years to better match the coal needs within a given year, Otter Tail noted in an Aug. 31 filing with the Minnesota Public Utilities Commission. The filing didn’t say anything about coal supply beyond 2012.

The Big Stone plant in South Dakota has a contract with Peabody COALSALES LLC for 2010, 2011 and 2012. That contract provided about 40% of the coal needs in 2010, 100% of the coal needs in 2011, and about 90% of the coal needs in 2012. The balance of the plant’s coal needs will be procured at a future time, the utility noted.

The Coyote station in North Dakota burns lignite from an adjacent mine that is supplied under a contract with Dakota Westmoreland. This contract expires in 2016. The Coyote co-owners recently completed an evaluation of future coal supply for Coyote, considering both North Dakota lignite and Powder River Basin alternatives. The results of that evaluation indicate that North Dakota lignite is the least cost fuel supply for Coyote. The co-owners are in the process of negotiating a lignite sales agreement with a new supplier, North American Coal, which would supply this fuel out of a new mine located near Coyote.

Company policy is to retain fuel inventories at all of its coal stations in the following amounts:

  • Hoot Lake – 20 days;
  • Big Stone – 30 days; and
  • Coyote – 20 days.

The Hoot Lake plant receives sub-bituminous coal supply by a unit train consisting of cars leased by the utility. The motive power is owned by Burlington Northern Santa Fe Railroad (BNSF) and the cars are switched at Dilworth, Minn. The locomotives used from Dilworth to Hoot Lake are owned by Otter Tail Valley Railroad. Transportation services are provided under the terms of a common carrier rate between the BNSF and Otter Tail. The rate is effective until Dec. 31, 2012.

Big Stone receives its coal by a unit train consisting of cars leased by the Big Stone plant co-owners. Locomotives are supplied by BNSF. Transportation services are provided under the terms of a common carrier rate between the BNSF and the co-owners of the Big Stone plant that is effective until Dec. 31, 2012.

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.