Gulf Power burned more coal than expected in 2014, but at a cheaper price

Gulf Power paid less on a per-ton basis for coal in 2014 than it had expected, though it did have a total coal cost that was above projections because it burned more of this fuel than expected.

This Southern Co. (NYSE: SO) subsidiary on March 3 filed with the Florida Public Service Commission “true-up” testimony in an annual fuel cost case that explains the differences in fuel usage and costs from the projections made earlier in 2014, to the actual data for the completed year.

Herbert Russell Ball, the Fuel Manager for Gulf Power, said the total actual cost of coal purchased in 2014 was $232,648,702 compared to the projected cost of $244,846,800 or 4.98% below the projected amount. The lower total coal cost was due to the actual weighted average price of coal purchased being $83.92 per ton, which is 7.10% below the projected price of $90.33 per ton. Gulf purchased some lower cost spot coal during the 2014 period.

The total cost of coal burned was $258,875,502. This is 3.20% higher than the projection of $250,845,394. The higher total coal burn cost was due to the quantity of coal burned being 7.72% above projections offset somewhat by the actual weighted average coal burn cost being $88.48 per ton which is 4.19% below the projected burn cost of $92.35 per ton for the period.

The total actual cost of natural gas burned for generation was $138,908,611. This is 7.24% above the projection of $129,524,607. The higher total gas cost was due to the actual weighted average gas burn cost being $5.24 per MMBTU, which is 6.29% higher than the projected burn cost of $4.93 per MMBTU.

Total coal shipments in 2014 amounted to 2,772,383 tons. Gulf purchased 47% of this coal on the spot market. Actual coal burn for 2014 was 2.93 million tons, up from an estimate for the year of 2.72 million tons.

There was 1.3 million tons of contract coal taken in 2014 at the utility’s mainstay Crist power plant, with that coal coming from American Coal, Foresight Coal Sales and Alpha Coal Sales. One contract supplier, Alpha Coal Sales, shipped 134,676 tons in 2014 to the lighly-used and soon-to-be retired Lansing Smith plant. For Gulf Power’s 50% share of the Daniel plant in Mississippi, the contract coal suppliers of a total of only 7,460 tons were Coal Sales/Twentymile Coal (that’s Peabody Energy) and Oxbow Carbon. That is a very low total for contract tons at Daniel, but that Gulf Power 50% share of Daniel covered a very high 865,656 tons of spot coal shipments in 2014. Crist took 237,720 tons of spot coal, and Lansing Smith took 210,911 tons.

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.