Tuesday, August 07, 2018

Coal pile at Appalachian power plant shows power of gas, even as Central Appalachian output hits nearly 3-year high

UPDATE: The Mine Safety and Health Administration reports that coal production in Central Appalachia in the second quarter was the highest in nearly three years, 20.4 million tons. That was the highest since the third quarter of 2015, when it was 22.6 million tons. Platt's has details.

"A utility that serves Eastern Kentucky and burns coal to produce electricity has sold $17.6 million worth of coal it didn’t need, offering yet another example of how the relatively low cost of natural gas has undermined the region’s economy," Bill Estep reports for the Lexington Herald-Leader.

The coal was meant for the Mitchell Power Plant in West Virginia, which is co-owned by Kentucky Power and has 168,000 customers in Eastern Kentucky, but the plant couldn't generate electricity as cheaply as competitors that used natural gas. Because Mitchell's energy was more expensive, the regional power-grid manager, PJM Interconnection, didn't order electricity as often from the plant. But the plant had to keep buying coal, under a long-term contract. At one point in late January, "there was a 53-day stockpile of one type of coal at the plant, while the company's target level was a 15-day supply," Estep reports.

Kentucky Power applied for and received permission from the Kentucky Public Service Commission to sell extra coal. A Connecticut-based trading company has agreed to buy 400,000 tons of coal for $44 a ton by the end of the year, Estep reports.

The episode illustrates both the rising use of gas to make electricity, and the hardship faced in coal country. "By the end of 2017, coal’s share of national electricity generation had dropped to 30 percent and the share for natural gas had grown to 32 percent, while renewable sources such as wind energy had climbed to 17 percent," Estep reports. "As coal-fired power plants have closed in the face of greater use of natural gas, the number of coal jobs in Eastern Kentucky dropped from 14,000 at one point in 2011 to just 3,835 in the first three months of this year, according to the state Energy and Environment Cabinet."

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