Louisville Gas and Electric bought 3.5 million tons of coal in the November 2012-April 2013 period, with much of that supply coming under contract from Alliance Coal LLC.
LG&E reported its latest fuel figures on Aug. 29 to the Kentucky Public Service Commission as part of a twice-yearly fuel cost review case. Sister utility Kentucky Utilities, which shares some of the coal purchases with KU, separately reported its fuel figures on the same day.
Leading coal suppliers in the six-month period, by contract, included:
- Alliance Coal LLC, 738,006 tons;
- Alliance Coal LLC, 1,468,436 tons;
- Armstrong Coal, 331,070 tons;
- Armstrong Coal, 256,564 tons;
- Foresight Coal Sales LLC, 284,716 tons; and
- Peabody Coalsales LLC, 157,302 tons.
The coal burns during the period by plant, with capacity factors included, are:
- Cane Run, 640,331 tons, 52.8% capacity factor;
- Mill Creek, 2,014,096 tons, 67.8%;
- Trimble County HS (high sulfur), not applicable in both cases;
- Trimble County PRB (Powder River Basin), not applicable in both cases;
- Trimble County 1, 875,187 tons, 83.7%; and
- Trimble County 2, 411,923 tons, 27.8%.
Obviously, Mill Creek and Trimble County 1 were the facilities that ran strongly during the period. The Trimble County values reflect 100% of the unit. Trimble County 2 is owned by KU (60.75%), LG&E (14.25%), IMPA (12.88%), and IMEA (12.12%).
LG&E listed its term coal contracts that were in effect during the review period. The newest is also mentioned in the KU fuel report of Aug. 29. That was executed in February of this year with Patriot Coal Sales LLC for coal out of the Highland mining operation in western Kentucky, calling for 300,000 tons this year (base price of $41.90/ton), 600,000 tons in 2014 ($47/ton) and 300,000 tons in 2015 ($49.75/ton).
As of April 30, the coal inventories by plant were:
- Cane Run, 188,122 tons or 32 days, target is 20-41 days;
- Mill Creek, 650,105 tons or 44 days, target is 20-44 days;
- Trimble County, 225,639 tons or 47 days, target is 22-45 days; and
- Total, 1,063,866 tons or 40 days, target is 20-42 days.
The Trimble County coal inventory includes both high sulfur coal, which is used in Units 1 and 2, and PRB coal, which is used only in Unit 2. The method of calculating days in inventory is based on each plant’s coal burn capability (coal tons in inventory divided by 90% of each generating unit’s heat input description from its air permit to operate).
Utilities making decisions on recent term and spot coal solicitation
On March 12, LG&E and KU issued a joint solicitation for spot and contract coal. No minimum or maximum tonnages were specified, with a contract period of up to 10 years. The number of vendors receiving bids was 139, with 24 companies responding with 44 offers. “The final selection of the vendor(s) from the bids has not been made; however, negotiations are still in progress,” the filing said. “The name of the selected vendors and supporting bid tabulation will be provided to the Commission after the negotiations are completed and the agreements signed.”
LG&E has several coal contracts that have expired, or are about to expire, that this new coal would replace.
- Foresight Coal Sales, coal out of various Illinois mines, contract has April 2012-December 2013 term, calls for 500,000 tons in 2012 and 1 million tons in 2013, with a current contract price of $48.50/ton. There are indications that there is a reopener or reopeners available for 2014 and 2015 business.
- Oxford Mining Co.-Kentucky LLC, coal out of western Kentucky mines, contract term of January 2012-December 2013, calls for 400,000 tons in 2012 and 600,000 tons in 2013, with a current contract price of $50.15/ton. Parent Oxford Resource Partners has said it is closing out its western Kentucky operations to focus on its core coal mining business in Ohio. No reopener indicated.
- Patriot Coal Sales, sourced from Dodge Hill mining operation in western Kentucky, term of January 2011-December 2013, calls for 120,000 tons in each of 2012 and 2013, current contract price of $60.24/ton. No reopener indicated.
- Patriot Coal Sales, sourced from various western Kentucky mines, term of January 2012-December 2013, calls for 1.25 million tons in each of 2013 and 2013, current contract prices of $46.25/ton for Quality 1 coal and $49.50/ton for Quality 2 coal. No reopener indicated.
- Rhino Energy LLC, sourced from Sands Hill operations in Ohio, was due to expire at the end of 2012, but LG&E took 1,660 carryover tons earlier this year. Had called for 360,000 tons in 2012.
- Solar Sources, various mines in Indiana, term of January 2012-December 2013, calls for 300,000 tons in 2012 and 420,000 tons in 2013, current contract price of $52.16/ton.
- Western Kentucky Minerals, mines in western Kentucky and Indiana, expired end of 2012, but with LG&E taking 15,888 carryover tons earlier this year. Called for 403,300 tons in 2012.