Gulf Power projects only slight coal burn rebound in 2014

Gulf Power’s weighted average coal burned price for 2013 is projected to be $104.54/ton, while the weighted average coal burned price for 2014 is projected to be $95.02/ton.

That is according to an Aug. 30 filing by Gulf Power at the Florida Public Service Commission as the utility offers the latest projections for 2013 fuel consumption and pricing, and offers initial projections for 2014. The testimony is in part from H. R. Ball, Fuel Manager for Gulf Power.

Those projected coal prices for 2013 and 2014 reflect a cost decrease of $9.52/ton or 9.11%. “Several of Gulf’s coal supply contracts have or will expire by the end of 2013 and these are being replaced with lower priced coal supply agreements,” Ball noted. “Gulf’s coal supply agreements have firm price and quantity commitments with the contract coal suppliers and these contracts will cover the majority of Gulf’s 2014 projected coal burn needs. The remaining coal supply needs, if any, will be purchased on the spot market.”

Perhaps the biggest factor in Gulf Power backing down its coal generation over the last couple of years has been cheap natural gas. The weighted average natural gas price for 2013 is projected to be $4.73/MMBtu. When the cost of natural gas hedging settlements is included in the total delivered gas cost, the 2013 projected cost is $5.09/MMBtu. Weighted average natural gas price for 2014 is projected to be $4.74/MMBtu. This is a decrease in price of $0.35/MMBtu or 6.88% from 2013.

The projections for 2014 for coal burn, by unit, with net capacity for all units, are below. Scholz is a little-used, close-to-retirement plant. The MW ratings and coal burn shown below for Daniel in Mississippi represent only Gulf Power’s 50% ownership of each unit, with the other 50% held by fellow Southern Co. (NYSE: SO) subsidiary Mississippi Power.

  • Crist Unit 4 (75 MW), 47,134 tons;
  • Crist Unit 5, (75 MW), 77,089 tons;
  • Crist Unit 6 (299 MW), 423,978 tons;
  • Crist Unit 7 (475 MW), 705,876 tons;
  • Scholz Unit 1 (46 MW), 2,384 tons;
  • Scholz Unit 2 (46 MW), 3,711 tons;
  • Lansing Smith Unit 1 (162 MW), 288,661 tons;
  • Lansing Smith Unit 2 (195 MW), 223,156 tons;
  • Daniel Unit 1 (255 MW), 400,750 tons; and
  • Daniel Unit 2 (255 MW), 217,161 tons.

Gulf Power plans 2.4 million tons of coal burn in 2014, at an average cost of $95.02/ton. Its coal inventory is projected to grow a bit during the year, starting at 27 days of supply in the month of January 2014 and ending at 31 days of supply in December 2014.

The projected 2014 coal burn of 2.4 million tons is slightly above the 2.2 million tons projected for 2013. But it is still vastly behind actual coal burns of 4 million tons in 2012 and 4.5 million tons in 2011, which was in the early stages of cheap natural gas and slack power markets eating into coal needs.

Gulf Power’s report to the PSC about June fuel procurement shows these suppliers by plant:

  • Crist – American Coal (out of Illinois), Oxbow Mining (Colorado), Foresight (Illinois) and Alpha Coal Sales (West Virginia);
  • Lansing Smith – Argus Energy (West Virginia);
  • Scholz – no supplier that month; and
  • Daniel – Peabody Energy‘s Twentymile operation in Colorado.
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.