Southern Company Services (SCS), the fuel buying arm of Southern Co. (NYSE: SO), issued on Sept. 11 a request for proposals on short-term coal business for the giant Scherer power plant in Georgia.
SCS is acting as agent for Georgia Power and other Scherer co-owners and is considering the purchase of compliance (up to 1.2 lbs/mmBtu of SO2) sub-bituminous coal to meet a portion of the short-term requirements of Scherer. It is considering the purchase of up to 7 trains/month or (approximately 100,000 tons/month) for October-December 2012 deliveries. The seller is requested to submit pricing based on fixed price f.o.b. mine.
Internet bids only will be received through 5:00 p.m. CST on Sept. 18. Faxed or mailed bids will not be considered. Offers from all Burlington Northern Santa Fe Railway (BNSF) origins will be considered. BNSF, unlike the competing Union Pacific, serves all the Powder River Basin mines in Wyoming and Montana. Shipments must be loaded in electro-pneumatic quick dump hopper cars. Unit train shipments will be scheduled by the SCS Fuel Department. Seller must be prepared to load unit trains 7 days per week, 24 hours per day. Norfolk Southern is the delivering carrier for Scherer.
SCS noted that two of Scherer’s four new SO2 scrubbers will be in operation during the October-December 2012 period. Therefore, only 50% of the sulfur adjustment needs to be made for shipments in that period.
The co-owners of the plant have indicated in various forums in recent years that the scrubbers, which in theory would allow burns of higher sulfur coals, probably won’t change the plant’s fuel supply from low-sulfur PRB coal, but that other coals would be possible if PRB coal became uneconomic. The plant switched from eastern bituminous coal to PRB coal in the 1990s, sending shockwaves through the coal industry because such a big plant that far from the PRB had made that move.
Supplier proposals will be evaluated using the bid price, sulfur and mercury content, and NOx emissions (where applicable) to determine a bid ranking based on $/MMBtu delivered cost. SCS will also take into consideration the cost associated with applying a dust topper to coal loaded into purchaser’s railcars.
The SCS website shows that Scherer has 3,272 MW of nameplate capacity and that it typically burns about 13 million tons of PRB coal per year.
Florida Power & Light owns 76.% of the capacity at Unit 4 of the Scherer plant. FPL said in Aug. 31 testimony filed at the Florida Public Service Commission in an annual fuels case that Scherer will fare relatively well in 2013 when it comes to capacity factors. The filing shows month-by-month capacity factors for the full year. Those factors range from a low of 66.6% in January, to a high of 93.1% in August, a hot month with heavy air conditioner load in the South. The January capacity factor of 66.6% may be a bit misleading, since the second lowest figure for 2013 is April’s 75.9% and only the first four months of the year have factors below 80%. FPL estimated that its costs to purchase coal for this unit in 2013 will average $2.45/mmBtu.