Coal inventory climbs as AEP’s Big Sandy plant runs little

Kentucky Power has a whopping 69 days of coal (710,528 tons) in inventory at the end of October 2012, which was 39 days over its target figure, due to factors like the economic downturn and reduced coal burn at its Big Sandy plant.

The utility, a subsidiary of American Electric Power (NYSE: AEP), reported details of coal supply in the latest edition of a twice-annual fuel report filed March 1 with the Kentucky Public Service Commission. The bloated coal inventory was due to reduced burn and a need to honor existing contracts with coal suppliers, plus a prolonged, but planned, maintenance outage at the 1,078 MW (net) Big Sandy power plant in late 2012.

During the May-October 2012 fuel review period, Kentucky Power didn’t issue any coal solicitations and wasn’t in litigation with any coal supplier. The company’s coal contracts during the review period were:

  • Arch Coal Sales (former International Coal Group contract), sourced from mines in Knott County, Ky., expired end of 2012, called for 240,000 tons in 2012;
  • Argus Energy LLC, sourced from various eastern Kentucky and southern West Virginia mines, expired end of 2012, called for 480,000 tons in 2012.
  • Beech Fork Processing, various eastern Kentucky mines, expires end of 2013, called for 46,867 tons in 2012 and 190,000 tons in 2013.
  • Rhino Energy LLC, Bevins Branch mine in eastern Kentucky, expires end of 2013, calls for 480,000 tons per year in 2011-2013 period;
  • S.M. & J. Inc., mines in Magoffin County, Ky., expires end of 2013, calls for 20,000 tons per month in 2011-2013 period;
  • Trinity Coal Marketing LLC, mines in eastern Kentucky and southern West Virginia, expired end of July 2012, deliveries were 20,914 tons in the January-February 2012 period.

In the May-October 2012 review period, Kentucky Power bought 897,327 tons of contract coal and no spot coal. The purchases were from: Arch, 110,775 tons; Argus, 334,579 tons; Beech Fork, 30,668 tons; Rhino, 260,548 tons; and S.M. & J., 160,758 tons.

The Big Sandy plant burned 624,843 tons during the May-October 2012 period, and took delivery of 897,327 tons. It had a capacity factor of only 31% during the period. By comparison, any reasonably well maintained plant with strong power demand should be able to turn out a capacity factor of 80% or more.

Notable is that this coal business doesn’t have much longer to run, since AEP plans to shut the 800-MW Unit 2 at Big Sandy in 2015, and is looking at shutting or switching to natural gas the 278-MW Unit 1 around the same time, in both cases to meet clean-air needs. Kentucky Power is seeking Kentucky PSC approval to transfer part of the coal-fired Mitchell plant in West Virginia to its service to help make up for that loss.

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.