AEP says 2016 coal costs at regulated plants rose 56 cents on year
http://www.chemnet.com Mar 06,2017 PlattsAmerican Electric Power experienced a slight increase in coal costs in 2016 at its regulated utilities and its system-wide coal inventory was above target levels as of December 31, according to a regulatory filing.
The Columbus, Ohio-based company said in a Wednesday filing with the US Securities and Exchange Commission that its regulated subsidiaries paid an average of $45.92/st for thermal coal last year, when they burned about 30 million st. That was up from $45.36/st in 2015, when they consumed around 37 million st, it said.
AEP expects to burn about 33 million st in 2017 at its regulated coal-fired power plants.
Like many utilities, AEP has been dealing with a large coal stockpile given the mostly mild weather and low natural gas prices over the past couple of years.
The company's coal consumption decreased in 2016 because of lower demand for coal-fired generation, higher gas-fired generation and the retirement of its Northwestern-4 and Welsh-2 coal units.
As of December 31, its regulated subsidiaries had an average 42-day supply of coal, or 12 days higher than their 30-day target.
AEP said spot market prices for coal started to strengthen in the latter half of 2016, reflecting tighter supplies and increased demand for export coal. The company's subsidiaries were buying slightly more than half of their coal through term contracts at the end of last year.
The company's competitive coal plants, now representing about 2,700 MW of generation, burned 10.4 million st in 2016 for an AEP system total of just over 40 million st.
The competitive plants -- Cardinal, Conesville, R.M. Stuart and Zimmer, all in Ohio -- attempt to maintain a coal inventory of 15 to 40 days, but their stockpiles were "above target levels" as of December 31, AEP said without elaborating.
Earlier this year, AEP completed the sale of its 2,600-MW Gavin coal plant in Ohio to a joint venture between Blackstone and ArcLight Capital Partners, who are continuing to operate the plant.
AEP expects a final decision on the disposition of its remaining competitive plants before the end of this year.
Melissa McHenry, an AEP spokeswoman, said Thursday the company currently owns about 26,000 MW of generation, of which 47% or slightly more than 12,000 MW is coal-fired.
During the past few years, AEP has retired or sold roughly 10,000 MW of coal-fired generation in several states including Ohio, Indiana, Kentucky and Texas.