News & Reviews News Wire Delayed coal shipments force Florida utility to limit coal-fired generation

Delayed coal shipments force Florida utility to limit coal-fired generation

By Bill Stephens | May 13, 2022

Tampa Electric Power. Co. blames low stockpile on lack of service from CSX, but railroad says Illinois mine is encountering production shortfalls

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A Florida utility has complained to federal regulators about coal service from CSX Transportation.

WASHINGTON – A Florida utility that is running low on coal has asked federal regulators to ensure that CSX Transportation provides adequate service to its power plant in Tampa.

Tampa Electric Power Co., or TECO, says it has been forced to curtail coal-fired generation at its Big Bend Power Station because CSX has refused the utility’s requests to deliver coal from Foresight Energy’s Sugar Camp mine in Illinois.

The utility requested 10 coal trains over a three-month span this spring, but CSX only delivered one. And now CSX has refused requests for service until June, citing labor and congestion issues, the utility told the Surface Transportation Board last week.

“As an explanation for the repeated refusals to provide service, CSXT has stated that it is focusing on minimum tonnage agreements and customers who, in CSXT’s view, are in danger of running out of coal and are more dependent on coal than TECO,” Carlos Aldazabal, TECO’s vice president of energy supply, told the board.

“To maintain reliable, low cost fuel supply at the Big Bend facility, TECO will need three or four trains in May and each succeeding month,” Aldazabal wrote. “Without these trains, generation from the coal-fired unit has been and will be limited.”

And that means the utility will have to rely on more expensive natural gas.

But CSX, in a Thursday letter to the STB, said the Sugar Camp mine has experienced production delays related to a fire that shut down the mine between August 2021 and February. When mining resumed, Sugar Camp’s production was at 50% of its normal output.

The mine is the primary supplier of coal for several power plants in South Carolina, Georgia, and Florida. Many of their coal stockpiles are at critically low levels due to production problems and the mine’s need to allocate coal supply among its customers, CSX says.

“CSX trains have encountered numerous instances where an arriving empty train is forced to wait extended durations because the mine is out of coal,” Adam Longson, the railroad’s vice president of energy sales and marketing, told the STB.

“CSX is surprised by TECO’s claims regarding CSX’s purported unwillingness to serve them,” Longson wrote. “In recent years TECO has had little interest in CSX’s service, primarily relying on natural gas and barge transported coal to generate power.”

TECO is not dependent on CSX for its coal supply, the railroad notes, and the Big Bend plant has three natural gas units and only one coal-fired unit.

“If CSX was the sticking point, Sugar Camp could simply barge coal down to Tampa,” Longson wrote. “Please understand that CSX would like nothing more than to move additional coal to TECO, but as of now, that is not within our control. While TECO may bury the loading delays at Sugar Camp in a footnote, from our perspective Sugar Camp is at the heart of the difficulties TECO is facing.”

Several utilities complained to the STB about service from the big four U.S. Class I railroads during last month’s hearings on widespread rail service problems.

7 thoughts on “Delayed coal shipments force Florida utility to limit coal-fired generation

  1. If we peel back the layers of all our problems we eventually come to a little old man in a lab coat.

    Coal, baby formula, microchips — it’s all the same.

    1. What I find fascinating is that a cover story says “X”. But when you peel back the onion you see that there is really more to it than “X”. In this case a swiss cheese effect came to happen, where the holes lined up and trouble came through. Hence the thumb points backwards.

      When everything is out there to be seen, you find that CSX is just a small part of the equation.

    2. The economy was doing very well before Covid. It killed thousands of small businesses, led to people not wanting to work, enabled Biden to “win,” and all the other downstream effects. We’re living in Potterville.

  2. The thumb always points backwards when it comes to blame.

    Technically CSX doesn’t even service this mine directly. It is served by the CN Buford Sub (former IC Edgewood Cutoff) and a circuitous branch line (Savatran Spur) to reach the Evansville Western, a Class III (former L&N) for markets east, where it connects with CSX in Evansville at Howell. CSX owns the land, EVWR leases the ROW.

    Some say why Illinois coal? It’s high in sulfur and doesn’t have the BTU quality that Power River does. Easy, its cheap. About 6-7 years ago the Illinois legislature cut almost all the taxes on Illinois based coal which created a boom in mining to keep servicing power plants that have invested in scrubbers. Illinois did this to offset Obama Era EPA rules to try and push coal generation off the market (which in part caused a massive natural gas conversion when prices dropped)

    Some but not all of these plants that couldn’t or wouldn’t convert to natural gas kept getting the cheap high sulfur coal and periodically mixing it with low sulfur Wyoming coal.

    Now, with the constant power undersupply in California, they have been absorbing all of the excess capacity the US natural gas industry was producing, this was forcing prices up. Then Russia invaded Ukraine and European markets were disrupted and so NG prices went even higher.

    A funny thing has happened. Now coal fired generation is becoming less expensive than NG, and plants that still burn it and have the scrubbers want to take advantage of it. More demand for cheap Illinois coal.

    But the Sugar Camp mine has a bigger issue.

    Sugar Camp is not a strip and fill mine like most in Illinois and Indiana. It’s one of the few Illinois underground mines.

    The mine (Sugar Camp) is in trouble because in their expedience to get the fire out quickly they used foam, which contains a permanent toxic chemical (PFAS), which the company is not set up to treat or licensed to discharge due to its toxicity. They did discharge it as part of the fire remediation work and polluted the water table.

    In all fairness to CSX, there are lots of other strip mines on that EVWR line bringing out Illinois coal. TECO probably has an exclusive supply agreement with the owners of the Sugar Camp mine, or they would have just moved to another supplier.

    When natural gas was king and coal was dying, having an exclusive deal with Sugar Camp was probably not a big deal. But when it comes to making money, they should have had an alternate supplier deal just in case.

    Why not barge the coal?

    Technically they could, EVWR is based out of Mt Vernon, Indiana and there is a transload facility there on the Ohio River. But barging coal to make up for a supply problem doesn’t fix the issues. Getting half full barges in twice the time can’t help TECO.

  3. Wow, what kind of business
    puts a new customer in blast mode? He could have stopped after putting the blame on the mine.

    Be more than sure that CSX existing customers are taking note.

    When there are problems with a new customer that is an opportunity to bind the customer closer.

    CSX has been more than irascible lately. This is how you get more regulated.

  4. Various internet sites show the Sugar Camp mine did indeed have a major fire. It apparently burned underground for several months, so CSX may have a point.

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