Air Pollution Control Equipment Services, Coal, Emissions

Rail rates for coal fell despite major shift to low-sulfur supply areas

Nov. 30, 2000–Despite concerns that the Clean Air Act Amendments would create too much demand for low-sulfur coal, a recent report from the Energy Information Administration (EIA) shows that the prices for coal have actually dropped.

The inflation-adjusted rates that electric utilities paid to ship coal by rail decreased by 26 percent between 1988 and 1997, and the rates for low-sulfur coal dropped by an even larger 35 percent.

Following passage of the Clean Air Act Amendments in 1990, requiring major cutbacks in sulfur dioxide emissions by electric utilities, there was concern that rail transportation rates for low-sulfur coal would escalate with increasing demand and changes in coal distribution patterns.

The opposite actually happened, according to a Congressionally mandated report released today by the Energy Information Administration (EIA). Railroads constitute the leading transportation mode for coal, accounting for 62 percent of all coal shipments in 1997 (the latest year for transportation rate data).

The rates in the report are averages based on confidential data from those electric power plants that must file the Federal Energy Regulatory Commission’s Form 580, and were augmented with data from the Commission’s Form 423 and with waybill statistics from the Surface Transportation Board.

The average rates are based on data covering 60-70 percent of all coal receipts at electric utilities. The expanding market for low-sulfur coal did affect coal distribution patterns. Fifty-three percent more coal was shipped from low-sulfur mines in Wyoming and Montana between 1988 and 1997.

Because those mines are remote from many power plants, the average distance coal was shipped rose by 24 percent, from 640 miles in 1988 to 793 miles in 1997. Central Appalachia, the source of most of the low-sulfur bituminous coal mined in the East, showed a 32 million short ton increase in distribution during the study period.

Coal transportation changes especially affected the Midwest, the location of most of the “Phase I” power plants that had to make major sulfur dioxide curtailments starting in 1995. Increased low-sulfur shipments displaced much of the high- and medium-sulfur coal formerly originating in the Illinois Basin and Northern and Central Appalachia.

The receipts of low-sulfur coal at all Phase I-affected power plant boilers soared by 389 percent between 1988 and 1997. The “Energy Policy Act Transportation Rate Study: Final Report on Coal Transportation” is available on the EIA Internet site at: Printed copies of the report are available from the U.S. Government Printing Office, 202/512-1800 or through EIA’s National Energy Information Center, 202/586-8800.