Duke Energy Kentucky signed major coal deal with Alliance Coal

During the November 2012-April 2013 fuel review period, Duke Energy Kentucky burned 539,960 tons of coal at the East Bend plant and 246,151 tons at the Miami Fort Unit 6, which includes only its ownership share of the applicable capacity.

Those are among the facts that this Duke Energy (NYSE: DUK) subsidiary reported in a half-year fuel filing at the Kentucky Public Service Commission that was made on Aug. 29.

Among the coal suppliers during that six-month period were:

  • Alliance Coal LLC, 124,918 tons;
  • American Coal, 64,375;
  • American Coal, 139,977;
  • Charolais, 50,431;
  • Foresight Coal Sales LLC, 75,743;
  • Patriot Coal Sales, 69,069;
  • Patriot Coal Sales, 36,308;
  • Patriot Coal Sales, 140,850;
  • Patriot Coal Sales, 16,994;
  • Peabody Coal Sales LLC, 40,356; and
  • Rhino Energy LLC, 41,740.

The utility took 1.02 million tons of coal during the period, with 78% under contract and 22% being spot coal.

Duke Energy Kentucky outlines its various coal contracts in the filing for East Bend, with no contracts shown for Miami Fort Unit 6.

For example, it shows two term contracts with Patriot Coal Sales that expire Sept. 30 of this year, and one that expires at the end of 2013. One of the Sept. 30 expirations is for coal out of the Blue Grass and Highland operations in western Kentucky, and calls for 266,276 tons in 2012, then 58,724 tons in 2013. The other Sept. 30 expiration is for Highland coal and calls for 228,115 tons in 2012 and 21,886 tons in 2013. The end-of-year expiration is for Highland coal and calls for 150,000 tons this year.

A new contract was executed on Feb. 14 with the River View Coal unit of Alliance Coal that expires at the end of 2015. It calls for 400,000 tons in 2013, and 600,000 tons per year in each of 2014 and 2015. Another contract for River View’s coal out of western Kentucky was executed in January 2011 and expires at the end of this year, with the contract calling for 220,000 tons/year in each of 2011, 2012 and 2013.

Duke Energy Kentucky’s total aggregate coal inventory across the system as of April 30 was 353,898.44 tons, or 43.7 days of burn. As of April 30, total station inventory at East Bend was 311,184.69 tons or 47.9 days. As of April 30, total station inventory at Miami Fort #6 was 42,713.75 tons or 27.2 days.

Asked if recent coal mine closures are impacting markets, the utility’s Brett Phipps responded: “As coal supply continues to decline to fall in line with current demand, we anticipate that equilibrium in the supply/demand curve will exist in the near future. If demand for coal increases significantly in the future, coal supply could be slow to respond due to the on-going closure of several mines. If future supply becomes limited, Duke Energy Kentucky would expand its reach of coal supply to ensure a reliable supply of coal. No shortage of supply exists today.”

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.