Duke Energy Indiana has deferred into 2016 some coal contracted for delivery this year as it seeks to cut down on a stockpile that at one point approached 5 million st or 80 days of supply, a company official said in a filing to the state's Utility Regulatory Commission.
From May 31 to August 31, Indiana's largest electric utility reduced its coal stockpile by more than 300,000 st to 4.5 million st, Brett Phipps, managing director of fuel procurement for Duke Energy Progress, said in the filing.
Duke Energy Progress is a utility affiliate of DEI, and both are subsidiaries of Charlotte, North Carolina-based Duke Energy.
DEI has done several things to decrease its coal inventory, Phipps said, including extending an existing storage agreement with an unidentified supplier to store coal at the supplier's mine facilities for up to one additional year.
That same supplier also agreed to defer approximately 174,000 st of thermal coal intended for delivery in 2015 to 2016.
Phipps said DEI also has reinstituted a "coal pricing decrement" strategy in an effort to boost the burn at its baseload coal plants in Indiana. Essentially, the utility offers below-price power to the Midcontinent Independent System Operator in a bid to use up more coal stored at the plants.
DEI also looks to resell inventoried coal, when it can. "Due to continued weak coal market conditions, resell opportunities will continue to be extremely difficult in the near term," Phipps noted.
He added that the company would "continue to closely monitor its anticipated coal requirements and inventories and take every action available to cost effectively control coal inventories in the least-cost impact manner for customers."
In the 12-month period ending August 31, DEI purchased about 12.2 million st of coal under long-term and short-term agreements.
Phipps said coal markets were likely to be "relatively stable" in Indiana until DEI's next fuel-adjustment charge case in early 2016.
But he noted that a number of factors meant there was potential for market volatility next year, citing the deterioration of the financial health of coal suppliers, recent US Environmental Protection Agency regulations and increased volatility in natural gas prices along with continued increases in gas supply.
