Vectren Corp. (NYSE: VVC) said Nov. 7 that the third quarter results from its Coal Mining division, inclusive of holding company costs, were a loss of $2.3m, about flat to the same period in the prior year.
Year-to-date in 2013, Coal Mining results were a loss of $12m, compared to break-even results in the prior year.
Coal Mining owns, and through its contract miners, mines and then sells coal to the company’s utility operations and to third parties through its wholly owned subsidiary Vectren Fuels. These three mines are in Indiana, as are Vectren’s own coal-fired power plants.
While coal sales and related revenues were higher in 2013 as compared to the prior year due to additional volumes sold, year-to-date results in 2013 were lower due to continued higher production costs associated with a thin coal seam and other unfavorable mining conditions at the Prosperity deep mine. Improvement measures are still being implemented, but substantial progress was made in the third quarter of 2013 in the execution of the revised mining plan, resulting in significant improvement in the production costs at Prosperity during the quarter.
Results during the quarter and year-to-date periods also reflect reduced pricing for customers associated with contracts that had price reopener clauses during 2012 and the overall softness in the coal market.
Vectren Fuels’ expected production is about 6.2 million tons in 2013. Coal sales in 2013 are estimated at 6.5 million tons. The company’s second deep mine at its Oaktown mining complex began production during the second quarter of 2013. Oaktown 1 is producing at costs that are very competitive and Oaktown 2 costs are expected to be similar once the production ramp up is complete, Vectren noted. To date, mining conditions and production costs at the company’s Oaktown mining complex are in line with expectations.
Vectren is an energy holding company headquartered in Evansville, Ind. Its energy delivery subsidiaries provide gas and/or electricity to more than 1 million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio. Vectren’s nonutility subsidiaries and affiliates offer energy-related products and services to customers throughout the U.S. These include infrastructure services, energy services and coal mining.