Utilities cope with less PRB coal

Utilities cope with less PRB coal

Washington (Platts)--1Aug2005

In spite of ongoing maintenance problems on the joint BNSF Railway/Union
Pacific line in Wyoming, it appears as if most utilities have been able to
cope with a shortage of Powder River Basin coal.

Last week, in response to a query by North American Electric Reliability
Council President and CEO Michehl Gent, several NERC regions and utilities
said they don't anticipate being unable to meet electricity demand.

Gent's query came after the Dept. of Energy began looking into the problem.

In a letter to NERC's regional managers July 21, Gent asked them to gather
information on problems the utilities were facing receiving coal deliveries
because of two derailments in the PRB caused by heavy rainfall followed by a
snowstorm in May. While the line has reopened, the railroads have said repairs
and maintenance will last through the end of November.
 
DOE spokeswoman Anne Kolton said the department was not acting in response to
a request from the White House, as Gent stated in his letter. She said the
department's Office of Electric Delivery and Energy Reliability constantly
monitors electricity supplies.

Gent had sought to gauge coal deliveries and how any shortfall would impact
utilities' ability to meet electricity demand through Sep 30 and Dec 31. He
also asked if the utilities had switched to alternative fuels, if their
reliance on bulk power imports had increased or decreased as a result of
reduced fuel deliveries, and other related questions.

During an earnings conference call last week,  BNSF Chairman, President and
CEO Matt Rose said shipments on the joint line for July-to-date were up to 61
trains/day, 6% more than in July 2004 and only slightly below the 63.6
trains/day average the line saw through April of this year, before the
derailments.

The utilities most impacted appear to be those in the Western Electric
Coordinating Council, which covers the 14 western states. WECC spokesman Steve
Ashbaker said Friday he has heard back from some of his members that the
derailments have impacted stockpiles. "But they don't foresee it being a
problem," he said. "It will reduce stockpiles but no one indicated any
concern." 

"So far from what we've seen, [utility response] seems to indicate there
aren't any significant problems," Brantley H. Eldridge, executive manager of
the East Central Area Reliability Coordination Agreement, told Platts Coal
Trader. He declined to discuss specific responses. 

"We've surveyed our plants and it's not going to be an issue here," agreed Sam
Jones, chief operating officer of the Electric Reliability Council of Texas. 

Ray Dotter, a spokesman for the PJM Interconnection and Mid-Atlantic Area
Council, also would not discuss their response. However, he said that since
the region is so far from the PRB, "transportation costs become a factor," and
it would be "a reasonable assumption" that most of the region's utilities
aren't affected. 

Several utilities also addressed the rail problems in their earnings calls
last week, and while some reported reductions in PRB coal deliveries of up to
30%, none was worried about meeting demand.

This story was originally published in Platts Coal Trader
http://www.coaltrader.platts.com.

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