(The following article by Dustin Bleizeffer was posted on the Jackson Star-Tribune website on March 7.)
GILLETTE, Wyo. — Despite its location near the nation’s most prolific coal mining field, a coal-burning power plant near Wheatland is responding to a nationwide shortage of coal delivery by rail because it’s not getting enough coal.
With only six days worth of supply on hand, the Laramie River Station power plant may be forced to curtail generation by 20 percent or more, according to Basin Electric Power Cooperative, one of several member owners of the 1,650-megawatt power plant.
The problem is not production, but the ability to move enough coal trains to serve all the Powder River Basin’s consumers in 35 different states.
“We think it’s related to lack of maintenance and lack of proper reinvestment,” said Floyd Robb, spokesman for Basin Electric.
“The situation is under further review by BNSF Railway,” said BNSF Railway spokesman Gus Melonus.
There are no planned job cuts at the Laramie River Station related to plans to curtail generation. However, Robb said that’s always a possibility, particularly if the plant is forced to shut down one or more of its generation units.
Some 14 active coal mines in Wyoming’s Powder River Basin produce about 390 million tons annually, which accounts for some 35 percent of the nation’s coal supply.
BNSF Railway and Union Pacific, which jointly own the main delivery triple-track line south out of the basin for delivery to points south and east, have struggled to match shipping demand since the line suffered two derailments in May.
Robb said nationwide demand for Powder River Basin coal was 348 million tons in 2005, yet delivery was 325 million tons. He said demand is forecast to top 370 million tons this year, yet utilities are expecting delivery to fall short by 20 million tons.
That means Basin Electric, and other Powder River Basin coal customers, are forced to buy power on the spot market, where higher natural gas and coal prices translate into higher bills for consumers.
Within the span of one year, coal on the spot market increased from $7 per ton to $20-plus per ton at the beginning of 2006 for Powder River Basin coal. That means the more a utility relies on the spot market for power, the more the customer will end up paying.
“The problem is not just for us, but for anyone who relies on Powder River Basin coal,” Robb said.
Basin Electric does have an ongoing dispute with BNSF Railway regarding shipping rates to the Laramie River Station, charging that it is a captive customer so it ends up paying a higher rate than customers with access to more than one shipper.
However, BNSF Railway is still obligated to deliver at least 24,000 tons of coal per day — the amount it takes to fuel the plant at full capacity — under federal tariff laws.
Robb said shipping rates are not at issue in regard to the current delivery problem. Neither is production. Mines are producing coal at or above last year’s rate. The railroads simply continue to struggle to meet growing demand for all their Powder River Basin customers.
BillTracker
* Last we knew: Back-to-back coal train derailments in the southern Powder River Basin last year cut delivery by about 20 percent.
* The latest: Continuing lack of coal delivery to the Laramie River Station power plant near Wheatland may force the plant to buy more expensive power on the spot market and even curtail some power generation.
* What’s next: Member owners of the Laramie River Station, which include several Wyoming cooperatives, plan to continue meeting electrical demand.