Coal, Emissions

Coal stocks at US power plants spark blackout fear

10 May 2004 – Coal supplies at US power plants are at their lowest levels in more than three years, sparking concern of possible blackouts this summer when demand is heavy for electricity to power air conditioners.

CoalPeople.com, a coal industry newsletter, said supplies may be 10-20 per cent lower than at this time last year, while National Mining Association experts believe that on average, coal-fired American plants have probably 40-45 days supply compared with 60-90 days which was normal in the 1990s.

Just last month, Peabody Energy Chairman and Chief Executive Officer Irl Engelhardt said reliability might become an issue at some plants, while hot weather in southern California this week once again highlighted how close America lives to an energy disaster.

“They (coal supplies) are much lower than they have ever been for some time,” said Connie Holmes, senior economist at the National Mining Association. “You can only run down stockpiles so much. I am a bit surprised.”

She said one reason for the reduction of coal supplies could be cost-cutting associated with deregulation. “They don’t want to tie up so much money for so long.”

Other factors are that many utilities built up reserves after the 2000-2001 California energy crisis and recent rail problems have disrupted coal deliveries in the East. In addition, recent high natural gas prices have had utilities opting to use up their coal.

The issue is significant because 95 per cent of US produced coal is used in US power plants – just over 1bn t last year, said Holmes. At the same time, coal comprises more than half of total US generation.

Peabody Energy said last month that coal inventories at US generators were estimated at approximately 110m t – their lowest levels since February 2001.

“The US supply/demand balance for coal is very fragile,” CEO Engelhardt said at the time. “We believe US coal stockpiles are at such low levels that reliability may be an issue at some plants.”

The Alliance to Save Energy, a Washington-based advocacy group that encourages individual consumers and energy producers to be more efficient, said the blackout last August, showed just how vulnerable the power grid might be.