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Feds Urged to Track Coal Stockpile Levels on Monthly Basis

FERC should monitor coal stockpile levels on a monthly basis "at plants in those states and regions where stockpiles are already below prior year levels," Alan Richardson, CEO of the American Public Power Association (APPA), said on Thursday.

"This is not a difficult task," Richardson said at a FERC technical conference that examined railroad coal delivery matters and their impact on markets and electric reliability.

He noted that the Energy Information Administration (EIA) collects this data. "They collect it on a plant-by-plant basis. It's available three or four months after collected, available to the public."

EIA can make this data available to other federal agencies, Richardson pointed out. In his prepared testimony, the APPA official said that since EIA has the stock data "much earlier than it is made available to the public, FERC could have close to real-time information on the status of coal stockpiles."

FERC has "a way of keeping your thumb on the pulse of what's happening with respect to this problem, simply by going to the Energy Information Administration and working with them to make sure that you're tracking what's happening at the coal-fired power plants, particularly those in the most vulnerable areas, the three regions with stockpiles that are below where they were last year -- the West North Central, the West South Central and the Mountain region -- and they're also below levels of last year in 14 states."

The APPA official's prepared testimony notes that the following 14 states had lower stock levels at electric power facilities compared to the prior year: Nevada, Missouri, Oklahoma, Wyoming, Iowa, Colorado, Texas, Kansas, West Virginia, Wisconsin, New Jersey, Nebraska, Georgia and Minnesota.

For these states, the year-to-year decline in coal stocks at electric power facilities ranged from approximately 2% to 42%. The average for all 14 states combined was 16%.

At the start of the conference, FERC Chairman Joseph Kelliher noted that "overall coal inventory levels are higher than last year. But at the same time, there's anecdotal evidence that inventories at certain large coal baseload units are very low. Now, it's possible both sets of data are true and there's also more than one explanation on why coal inventories at certain coal-powered stations may be low."

The FERC chairman said that the purpose of the meeting was to assess the adequacy of electric supply this summer "by examining the nature of the coal delivery and inventory problem."

Kelliher noted that FERC has requested additional data on coal inventories from EIA "and have set up a meeting with EIA to discuss the sharing of information regarding coal inventories within the statutory requirements."

Once the Commission "has a greater understanding, we'll decide what steps, if any, we will take next," he added.

Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA), told the conference that FERC has "jurisdiction to examine this problem and the problems of coal delivery are part of a new reliability jurisdiction that was provided as a part of the recently passed energy act."

English also said that as part of its market assessment and outlook studies, FERC should monitor "coal delivery problems, not only today and this summer, but into the future." In addition, he said FERC should encourage the North American Electric Reliability Council (NERC) to maintain a focus on coal delivery problems.

In its summer 2006 summer power assessment, NERC said that it was adding the Powder River Basin (PRB) coal delivery issue to its watch list for this summer (see Power Market Today, May 16).

Meanwhile, English also said that FERC should commit to a future technical conference to examine whether current conditions have improved or worsened.

"What I have heard here today has nothing to do with electric reliability," said Edward Hamberger, CEO of the Association of American Railroads. "I have not heard one case where one generator was threatened to shutdown. There has been a fuel switch. We cannot provide every ton of coal that is desired. But we are moving more coal than has ever been moved before."

Hamberger said that "this is not a matter of reliability. It is a matter of supply and demand in the coal industry." He said that "there is no crisis. Our ability to deliver coal is anything but broken. In 2005, we moved more coal than ever before and we are on track to move more coal in 2006, breaking 2005's record."

William Mohl, vice president for commercial operations at Entergy Services Inc., also testified at the conference. In pre-filed testimony earlier in the week, Mohl recommended that FERC and the Surface Transportation Board conduct a regular joint review of coal transportation deliveries (see Power Market Today, June 15).

Prior to FERC's announcing the June 15 meeting, top officials with associations representing public power, investor-owned utilities and rural electric cooperatives sent a letter to FERC voicing concerns about railroad coal delivery problems and the possibility that those difficulties could have a negative impact on U.S. power grid reliability (see Power Market Today, May 3). The head of the Electric Power Supply Association also sent a separate letter to FERC outlining EPSA's concerns related to the state of coal deliveries by rail.

The issue of coal deliveries via railroads has also caught the attention of federal lawmakers. The U.S. Senate Energy and Natural Resources Committee in May held a hearing on the matter (see Power Market Today, May 26). At that hearing, an official representing utilities and rail customers said removing the railroad industry's exemption from antitrust law is just one of several steps that Congress can take to address coal delivery woes.

Union Pacific and BNSF Railway Co. in early May unveiled plans to begin what they said is another significant capacity expansion on the jointly owned rail line serving the Southern Powder River Basin coal fields, the largest open-pit, low-sulfur coal reserves in North America (see Power Market Today, May 10).

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