Louisville Gas and Electric and Kentucky Utilities are terminating a contract with coal producer CONSOL Energy (NYSE: CNX), said utility spokesman Brian Phillips on Oct. 10.
He said the contract was terminated after the sides failed to reach agreement during a price reopener. Louisville Gas and Electric and KU reported only one contract with CONSOL in Sept. 12 fuel reports they filed separately at the Kentucky Public Service Commission. They file these reports twice per year as part of a fuel cost proceeding. Phillips said that this is the contract that has now been terminated.
The source for the contract was CONSOL’s Shoemaker longwall mine in northern West Virginia, with the contract effective in January 2010, with a start of deliveries in June 2010, and running to the end of 2014. It called for 1.2 million tons in 2011, shared between LG&E and KU (mostly KU), and no contract tons are shown in the filings for 2012-2014. But there is an indication in the filings that those years are subject to a contract reopener for that period, with the coal having a current price of $54.50/ton.
Phillips said the contract had called for 1 million tons per year in each of 2012, 2013 and 2014. He said this coal will be replaced in the normal coal solicitation process for the utilities.
LG&E, incidentally, bought 4.3 million tons in the November 2011-April 2012 period, the utility reported in its PSC filing. The biggest coal supplier during that six-month period was Alliance Coal LLC, which had three contracts under which it delivered 730,005 tons, 734,482 tons and 1.03 million tons. Notable is that one of those contracts with Alliance, which had called for 4 million tons per year, expired at the end of 2011.
KU reported that it purchased 3.8 million tons during the November 2011-April 2012 period, with the top supplier being western Kentucky producer Armstrong Coal Co. under three contracts.
LG&E and KU are both units of PPL Corp. (NYSE: PPL) and do coordinated coal buying, with coal under any given contract often moving to plants of both companies.