January 25, 2018 Read More →

Kentucky Power Company Seeks a Buyer for Coal Overstock

S&P Global Market Intelligence:

In a sign that some areas of the U.S. thermal coal market could still be flooded with coal, a power generator in West Virginia wants to sell its own excess supply to deal with a growing stockpile and a long-term contract with a nearby mine.

Kentucky Power Co., a subsidiary of American Electric Power Co. Inc., asked the Kentucky Public Service Commission to allow the company to sell up to 200,000 tons of high-sulfur Northern Appalachia coal to unaffiliated third parties due to lower demand for power from the company’s 1,560-MW Mitchell (WV) generating station. The 200,000 tons scheduled for 2018 delivery is the Kentucky subsidiary’s share of the 400,000 tons to be sold by AEP, which also has a West Virginia subsidiary that owns part of the plant.

S&P Global Market Intelligence data shows that Mitchell, which saw its first unit go into service in 1971, operated at about a 56.1% capacity factor in 2016. A recent analysis showed that as the U.S. coal fleet has contracted, many of the remaining plants were also used less. Meanwhile, relatively high levels of utility stockpiles of coal in recent months have limited room to negotiate higher coal prices. Some coal executives have predicted interyear buying could become more normal as long-sought, stable, long-term advance contracts become harder to obtain.

Kentucky Power’s target level for Northern Appalachia coal is a 15 full burn-day supply, but the company’s inventory in mid-November 2017 was at 50 days of burn. With anticipation that the inventory situation is likely to stay substantially above targets in 2018 and possibly into 2019, the company wants to capitalize on independent coal brokers who occasionally approach the company to purchase coal for third parties.

More ($): W.Va. power plant amassed too much coal, wants permission to sell it

Comments are closed.