Xcel warns federal board about coal delivery issues at Sherco

Xcel Energy (NYSE: XEL) on July 31 filed a letter to the U.S. Surface Transportation Board from Xcel Chairman, President and CEO Ben Fowke saying that rail delivery issues are endangering the operation of the Sherburne County (Sherco) power plant in Minnesota.

“I am writing to you to express my concern over the ability of the BNSF to deliver sufficient coal to our electric generating stations,” Fowke stated. “The coal-fired Sherco generating station, located 45 miles north and west of Minneapolis, is critical to maintaining the electric reliability of the upper Mid-West. As the third largest plant in the region, its nearly 2,500 MWs of generating capacity can serve 1.9 million homes. Literally 24% of the electricity consumed by our customers in Minnesota, North Dakota, South Dakota, Wisconsin, and Michigan is normally produced at this facility.”

The plant has single carrier rail service from the BNSF Railway for Powder River Basin coal. Beginning in October 2013, Xcel saw greatly reduced deliveries. In the fourth quarter of 2013, the BNSF delivered 486,000 tons below the monthly minimum ratable deliveries, Fowke said. Since the beginning of 2014, the BNSF has continued to deliver less than the minimum ratable deliveries, resulting in a delivery deficit of 325,000 tons of coal. Combined, this has resulted in a total delivery deficit of 811,000 tons or an amount equivalent to 40 days of normal coal consumption.

Natural gas at this generating station is not an option, so when the plant is out of coal, it can’t produce electricity. And Xcel is right in the middle of summer when air-conditioning load creates high electric demand.

The STB has been paying close attention to rail service issues lately and has taken steps to focus railroad attention on particular areas of concern. In April, the board required a specific plan for moving large quantities of fertilizer into the market during the crop planting season. At the end of June, the STB again ordered detailed reporting on past-due grain orders to be submitted for the time being on a weekly basis.

“If the Board is going to continue to issue reporting or other requirements benefitting specific commodity groups, then circumstances certainly warrant formal STB focus on the measures the railroads are taking to reduce the backlog of coal deliveries that have the potential to impact the reliability of our electric grid,” Fowke concluded.

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.