Houston (Platts)--20Jun2008

Flooding in the Midwest has halted coal deliveries to utilities, possibly
leading to an increase in off-peak power prices in the Midwest Independent
System Operator, the PJM Interconnection, and Southeast US markets, Barclays
Capital said Friday.

The Norfolk Southern and Union Pacific railroads have halted coal
shipments or declared force majeure, Barclays said in its daily commodity
briefing.

Flooding along the main river corridors in the Midwest has made bridges
impassable, and numerous rail cars are flooded.

"But with over 40 days inventories at eastern coal plants, we do not
expect plants to run out of fuel, provided the flooding recedes as expected,"
the report said.

Still, the report said spot coal prices have rallied as a result of the
rail problems. Power plants that purchase spot coal can expect high production
costs this summer as well as longer term costs increases for plants with a
contract re-opener coming up, the report said.

Near-term off-peak power price increases can be expected to increase in
MISO, PJM and the Southeast because coal, which is used in baseload plants, is
the marginal fuel during portions of summer in those regions.