Coal-supply disruption has utilities looking for alternate fuel

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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