Louisville Gas & Electric signs coal deal with Foresight

March 7, 2013 Barry Cassell Generation

Louisville Gas and Electric (LG&E) is projecting coal purchases of 7.3 million tons in 2013, at a cost of $395.1m, with purchases moving up to 7.7 million tons of coal in 2014 at a cost of $427.6m.

The utility on March 1 filed the latest of its twice-yearly fuel purchasing reports with the Kentucky Public Service Commission. This report covers the period May-October 2012. The narrative overview testimony in the filing was identical to that in a filing the same day from Kentucky Utilities, a sister company that shares coal supply and coal purchasing functions with LG&E.

As of the end of October 2012, LG&E had 1.3 million tons of coal in inventory, which is 48 days at full burn, above a target inventory of 24 to 42 days. The inventories by plant were:

  • Trimble County, 58 days, 283,097 tons, which includes high-sulfur coal for Trimble County Units 1-2, and Powder River Basin blend coal for only Unit 2;

  • Cane Run, 43 days, 250,940 tons; and

  • Mill Creek, 51 days, 752,536 tons.

LG&E bought 3.9 million tons of coal in the May-October 2012 review period, with the top five suppliers being:

  • Alliance Coal, 1,437,288 tons;

  • Alliance Coal (separate contract), 880,325 tons;

  • Armstrong Coal, 473,476 tons;

  • Armstrong Coal (separate contract), 309,520 tons; and

  • Peabody COALSALES, 256,737 tons.

There are various coal contracts listed, with basic details included about contract specs, tonnages and prices. Notable is a contract arrived at in March 2012 with coal operator Chris Cline’s Foresight Coal Sales LLC for coal out of Cline’s various deep mines in Illinois. This contract has a base term that expires at the end of 2013, but indications are there is a reopener for tonnages and terms beyond that. The contract calls for 500,000 tons of coal in 2012 and 1 million tons in 2013. The base prices (FOB barge) are $46/ton in 2012 and $48.50/ton in 2013.

Some of the other contracts, that mostly involve shared tonnages with Kentucky Utilities, include:

  • Alliance Coal, origin of River View mine in western Kentucky, expires end of 2015, calls for 2 million tons per year for the 2011-2015 period;

  • Alliance Coal, various mines in western Kentucky, expires end of 2016, calls for 3 million tons per year in 2012-2016 period;

  • Armstrong Coal, various mines in western Kentucky, expires at end of 2016, calls for 2.1 million tons per year for 2011-2015 period, then 900,000 tons in the final year of 2016;

  • Armstrong Coal, various mines in western Kentucky, expires end of 2016, calls for 1.25 million tons per year in 2011-2013 period and 750,000 tons per year in 2014-2016 period;

  • Armstrong Coal, various mines in western Kentucky, expires end of 2015, calls for 500,000 tons in 2013, then 1 million tons per year in 2014-2015 period;

  • Oxford Mining Co.-Kentucky LLC, expires end of 2013, covers 400,000 tons in 2012 and 600,000 tons in 2013;

  • Patriot Coal Sales, various mines in western Kentucky, expires end of 2013, calls for 1.25 million tons per year in 2012-2013 period; and

  • Peabody COALSALES, various mines in Indiana, expires end of 2014, calls for 1.5 million tons per year in 2012-2014 period.

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.
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