(Dollars per Short Ton)
Business Week Ended April 10, 2009
Posted on 04/17/2009 12:35:50 PM PDT by shove_it
NEW YORK, April 17 (Reuters) - Utilities that face dwindling demand for their electricity are balking at high contract prices for coal, and some are looking at ways to renegotiate with the mining companies, industry experts said on Friday.
In another blow to coal miners, who have seen spot prices plummet 25 percent this year, many power plants are instead burning natural gas, which is at its lowest price in more than six years.
As a result, miners are being forced to cut production of coal they would have sold to the utilities at higher prices locked-in to contracts negotiated last year.
"The problem of utilities having more coal contracted than they would like is pretty widespread in the East (United States)," said Jim Thompson, editor of the industry newsletter Coal & Energy Price Report.
"Contracts were made when (coal) prices were roaring along (last year) and now they have opportunities to buy cheaper natural gas," he said.
At the National Coal Transportation Association conference in Nashville, Tennessee this week, an American Electric Power (AEP) (AEP.N) executive said the utility -- one of the largest in the United States -- was looking at the possibility of buying-out coal contracts.
"We have several million tons (of coal) we don't need," Nick Akins, AEP's executive vice president of generation, told the conference. "The load capacity is just not there."
He said AEP burned about 78 million tons of coal per year, but that will drop by about 10 percent this year, through a combination of more natural gas usage and a decline in electricity demand from industrial customers.
A spokesman said Columbus, Ohio-based AEP was looking at offloading 7 million tons of coal this year, either by "restructuring the terms of contracts" or by reselling it.
[...]
(Excerpt) Read more at reuters.com ...
Hold off till summer when the air conditioners come on.
They must not be listening to the 0. With Cap and Trade, coal is out. Energy prices are going way up not down. It will serve the blue states right to freeze in the dark. Particularly the PA miners who chose to vote for him after he told them they were about to be screwed. They keep electing the people who will exacerbate their problems.
It is going to be a cold summer, fall and winter this year and next. There is nothing happening on the surface of the sun. Build up mountains of coal now.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.