Coal

[mhlld]

Coal-supply disruption has utilities looking for alternate fuel

Washington (Platts)--6Jul2005
Ongoing coal supply problems from the Powder River Basin have some power producers switching to natural gas, and the higher fuel costs will be passed on to customers.

Repairs to the joint line owned by BNSF Railway and Union Pacific following two derailments in May will take through at least November, the railroads said recently.

"We've been aware of it and conserving coal when possible," Xcel Energy Colorado spokeswoman Margarita Alarcon told Platts Coal Trader on Wednesday. "We've also switched to using natural gas at some of our plants."

She said the 700-MW Comanche station in Pueblo, the 547-MW Pawnee station in Brush and the 232-MW Arapahoe station in Denver have been converted to natural gas from PRB coal. The 710-MW Cherokee station in Denver and the 199-MW Valmont station in Boulder can also be switched. The company's Bullock, Cameo and Hayden plants also use coal from Wyoming or Colorado, but cannot switch to natural gas.

Mary Sandok, an Xcel corporate spokeswoman, said the company is conserving coal whenever possible at all of its PRB burning plants in Minnesota, North Dakota, South Dakota, Texas and Wisconsin, as well as Colorado, but wouldn't discuss specific plans. "We're working with the railroads to maximize the coal
deliveries to our plants."

But the higher costs for replacing PRB coal with natural gas will be passed through to customers.

MidAmerican Energy Co. spokesman Mark Reinders said it is company policy not to comment on its coal supply or stockpiles. But he said the company doesn't currently plan to switch any of its coal-fired plants to natural gas. In Iowa, the company's 1,686-MW George Neal plant in Sioux City and the 141-MW Riverside plant in Davenport are dual fired.

The Western Coal Traffic League, which represents coal users west of the Mississippi River, also said it has concerns. In a letter to Surface Transportation Board Chairman Roger Nober, responding to his letter saying the railroads handled the demands of the 2004 peak season "without any significant
degradation of system fluidity and performance," the WCTL said that is not what coal shippers experienced.

"A number of league members, including, but hardly limited to, Arizona Electric Power Cooperative Inc., suffered from impaired service in a variety of respects," President Mark Schwirtz of AEPC wrote. "Several members have had burnable stockpiles at coal plants of 10 days or less at times in the past year (and at least one is suffering from that condition currently)."

On July 1, UP said it is cutting coal shipments from Wyoming mines as much as 20% until November -- and possibly into 2006 -- while repairs are made to tracks along the joint line in Wyoming. Repairs may stretch into next year if the area has a wet summer or an early winter that limits work time.

Union Pacific said on its website that it will allocate shipments among utilities, filling 80%-85% percent of demand.

While BNSF said repairs would take a "modest" amount of time, spokesman Pat Hiatte couldn't provide a better estimate. He also couldn't provide the number of trains the company expects to ship out of the PRB while maintenance is done. But the company's web site shows 50 coal trains/day were shipped the week of March 13. The week of May 22, service fell to 37.3 coal trains/day and for the week ended June 26, the most recent data available, shipments averaged 46.1 trains/day.

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