Tennessee Valley Authority cuts CAPP coal receipts

Galax, Virginia (Platts)--7 Oct 2013 615 pm EDT/2215 GMT

The Tennessee Valley Authority, like fellow southeastern US utility giant Southern Company, has almost completely stopped taking Central Appalachian coal at its traditionally CAPP-served plants, according to data supplied to Platts from the federal utility.

These are power plants that for all practical purposes are in the front yards of the eastern Kentucky and eastern Tennessee coalfields.

Southern's director of coal services, Robert Hardman, at a recent Platts Coal Marketing Days conference, cited cost considerations when he said the Atlanta-based utility expects its CAPP coal purchases to drop to 1% of its total projected 2016 coal receipts of 45 million-50 million st.

Article continues below...

Request a free trial of: Coal Trader Coal Outlook
Coal Outlook

Platts Coal Trader provides:The latest prices for key benchmark coals

  • Daily pricing for tons and allowances for SO2 and NOx emissions
  • The exclusive Platts OTC Broker Index, a market assessment compiled from three of the largest and most respected coal brokers
  • What happened in yesterday's OTC markets, and why
  • An analysis of coal price trends in all major U.S. producing areas
  • Details of how major coal companies are trading in the financial markets
  • Coverage of mine openings, closings, production
  • Reports on who's in the market for coal
Request a trial to Coal Outlook Request More Information

TVA has spent billions of dollars in retrofitting the coal-fired fleet with emissions controls -- or shutting down coal units entirely -- to meet more-stringent air pollution laws.

"We have switched from CAPP coal to other basins mainly due to cost," TVA spokesman Scott Brooks said Monday. "Our plants that have environmental controls have greater flexibility on fuel blends."

TVA has spent about $5.4 billion on emissions controls at its fossil-fueled plants through 2011, according to the utility.

TVA's Bull Run, near Oak Ridge, Tennessee, is an 870-MW single-generator coal-fired plant that takes Illinois Basin and Uinta Basin (Colorado and Utah) bituminous coal. It is expected to burn about 630,000 short tons this year, Brooks said.

At Widows Creek, in northeastern Alabama, the two units with a combined summer net capacity of 974 MW take Illinois Basin coal. The plant on the Tennessee River is expected to burn about 1.8 million st this year, Brooks said.

Widows Creek units 1 through 6 were idled in 2010 and 2011, according to TVA.

The 1,398-MW summer net capacity Kingston plant is also on the Tennessee River but upstream in eastern Tennessee near Knoxville. Also historically a burner of CAPP coal, Kingston now takes Powder River Basin and IB coal and is expected to burn about 3 million st this year, according to Brooks.

Another eastern Tennessee power plant, the four-unit, 704-MW John Sevier, saw two of its units mothballed and the other two retired at the end of 2012, and a combined-cycle gas plant built there in the last year, Brooks said.

"It's important to note that Paradise, in [western] Kentucky, will burn 100% Illinois Basin coal this fiscal year, of which a large portion will come from Kentucky," he said.

The three-unit Paradise, with a summer net capacity of 2,201 MW, burns about 20,000 st/day of coal, according to TVA, or an estimated 7.3 million st/year.

--Steve Hooks,
--Edited by Richard Rubin,

Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.