Virginia Electric’s coal burn drops sharply in past year

Virginia Electric and Power burned 8.8 million tons of coal in the 12-month period September 2011-August 2012, down sharply from 10.6 million tons in the September 2010-August 2011 period, according to reports that the utility has filed with the North Carolina Utilities Commission.

A monthly fuels report covering August of this year, with some figures for the prior 12-month period, was filed on Oct. 17 at the commission. The coal figures from that report, while holding some interest in and of themselves, are only a snapshot in time. But, by comparing like figures for the month of August 2011 and that prior 12-month period, filed at the commission on Oct. 17, 2011, one can see just how sharply the utility’s coal burn has dropped. Many other utilities across the country have reported similar coal burn drops due to slack power demand, cheap gas-fired generation and encroaching emissions limits.

In the September 2011-August 2012 period, Virginia Electric received 8.7 million tons of coal and burned 8.8 million tons. In August 2012, the company received 1.1 million tons of coal and burned about the same amount. Note that August is normally a heavy burn month, due to air conditioner load, so burn in that month tends to be higher than much of the rest of the year.

Virginia Electric’s beginning coal inventory in September 2011 was about 1.5 million tons, and it stood around that figure by the end of August of this year. It reported similar figures for the beginning to the end of the September 2010-August 2011 period, so coal inventories haven’t grown in the past couple of years. Other utilities have reported climbing inventories over that same period.

In August 2012, the biggest coal taker was Virginia Electric’s Mt. Storm power plant in northern West Virginia, which is a scrubbed plant that takes mostly Northern Appalachia coal from nearby mines. Mt. Storm in August took in 355,586 tons of contract coal at a delivered cost of $57.92/ton. It also took in August 23,096 tons of spot coal at a very low $22.15/ton. That is the kind of cost that is below the normal price of coal production in this region. No reason is given for that low a price. Average specs for the Mt. Storm coal in August included 2% sulfur and 11,968 Btu/lb.

The second biggest coal taker in August of this year was the Chesterfield plant in Virginia, which has to take a lower sulfur, and therefore higher cost, coal. It took 205,156 tons of contract coal at $100.55/ton and 23,305 tons of spot coal at $77.81/ton. Like the big differential between contract and spot coal prices at Mt. Storm, the sharply lower spot price at Chesterfield is an apparent indicator of just how lousy the current coal market is. Average August coal specs for Chesterfield included 1.07% sulfur and 12,611 Btu/lb.

Notable is that the new Virginia City Hybrid Energy Center (VCHEC), which started full operations recently, took coal in the period covered by the most recent fuel report, but did not appear at all in the report from last year.

Virginia Electric, which does business in Virginia as Dominion Virginia Power and in North Carolina as Dominion North Carolina Power, is a unit of Dominion Resources (NYSE: D). It mostly serves Virginia, but does have some customers in North Carolina.

Coal retirements, conversions in utility’s plans for the future

Retirements of coal generation at the Yorktown and Chesapeake plants are among the many elements of a new integrated resource plan (IRP) that Dominion filed Aug. 31 at the Virginia State Corporation Commission. The plan includes:

  • the repowering of Bremo Units 3 and 4 totaling 227 MW from coal to natural gas by 2014;
  • three ongoing coal-to-biomass conversions at the Altavista, Hopewell and Southampton units, totaling 153 MW.

In light of changing U.S. Environmental Protection Agency regulations, various alternatives were analyzed in the IRP process with respect to the company’s “at risk” coal and oil-fired units. Coal-fired units that are environmentally controlled will continue to operate with relatively small additional expenses. The impact on at risk units in the 2012 plan includes retiring 918 MW of coal-fired generation by 2015 at Chesapeake Units 1-4 and Yorktown Units 1-2.

Notable is that the August 2012 fuel report filed in North Carolina shows Bremo as taking only 18,960 tons of coal that month, all of it contract coal, at $90.13/ton. In August 2011, Bremo, also known as Bremo Bluff, took 21,248 tons of contract coal and another 21,829 tons of spot coal.

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.