Thanks, Obama! Kentucky Power Co Wants Permission To Sell 200K Tons Of Coal It Can't Use
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.
In an interview in early January, Energy Ventures Analysis President Seth Schwartz suggested a bout of cold weather early in the month could prompt a stockpile draw that would potentially take a big weight off the sector. Analysts will likely be keeping a close eye on January stockpile reports as coal producers hope the cold blast, surrounded by relatively mild winter weather, may draw down stockpiles.
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