Consumers Energy outlines 2017 coal procurement position

Consumers Energy presently has approximately 4.5 million tons of coal committed for 2017 from its multi-year or annual purchases, said a company official in Sept. 30 testimony filed at the Michigan Public Service Commission.

This was testimony filed in the utility’s annual Power Supply Cost Recovery case. Jim K. Chilson II, the utility’s Fuels Transportation & Planning Director in the Energy Supply Operations Department, wrote that the company has approximately 4.5 million tons of coal committed for 2017 from multi-year or annual purchases. At this time, the company anticipates it will purchase additional coal in 2016 for 2017 delivery. However, the volume of coal for this purchase is yet to be determined. Approximately 2 million tons of coal is expected to be purchased on a spot basis in 2017.

The company burns a variety of coals in varying combinations at its generating plants in an effort to minimize its production costs and meet regulatory requirements. A blend of low-sulfur eastern and low-sulfur western coal is included in the fuel mix. Coal is transported by rail from the mines either directly to generating plants or to Great Lakes terminal facilities, where the coal is transferred to lake vessels for delivery.

He listed seven coal contracts, with unnamed suppliers, with two beginning on Jan. 1 of this year and running through at least 2017, and five others that begin on Jan. 1 of next year and run only for that calendar year. Coal will go in 2017 to three units at the Campbell plant and two units at Karn. The utility retired seven other coal units earlier this year at the Cobb, Weadock and Whiting plants.

During 2017, the company expects to have in effect three contracts that will provide for the shipment of coal on railroads and one or more contracts that will provide vessel services and terminal services for shipments. The company will not have a contract in place for rail transportation east of Chicago to the J.H. Campbell plant. The company plans to use common carrier (i.e. tariff) rates for rail transportation from Chicago to the Campbell plant. The company’s use of common carrier rates arises from its dispute with CSX Transportation over CSXT’s disproportionately high coal transportation rates to the Campbell plant, Chilson said. The company is continuing to pursue its complaint against CSXT over this issue before the federal Surface Transportation Board.

Quantities of coal are secured over time that typically positions the company to have 70% to 90% of its anticipated total volume secured by the fall of each year for the following calendar year, approximately 40% to 50% secured for the next calendar year, and approximately 20% to 25% secured for the third calendar year.

Robert C. Schram, the utility’s Director of Compliance & Quality Systems, wrote about air controls for the coal capacity: “The Company has installed FGD units (a.k.a. SDA and DSI) at its Karn and Campbell sites. SDAs were installed at Karn Units 1 & 2 in 2014 and were installed at Campbell Unit 3 in early 2016. DSI was installed at Campbell Units 1 & 2 in early 2016. Lime will be injected into the SDA/DSI where it will react with SO2 and heavy metals found in the exhaust gases. When used in combination with Pulse Jet Fabric Filters (‘PJFF’), SO2 and heavy metal emissions are reduced, allowing the Company to comply with the current emission standards.”

FGD is flue gas desulfurization, DSI is direct sorbent injection and SDA is spray dry absorbers.

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.