Power Plant Contingency Plans Regarding Coal Delivery By Rail

Trains Magazine General Discussion
1

I’m interested in knowing what plans are in place to avoid the interuption of power generation should a unit coal train be delayed by a day or more for any number of unforeseen reasons.

I know that most power plants receive coal on almost a daily basis and that continuity of service is dependent on the timely arrival of those coal trains. What would happen if, for example, a coal train from the Powder River Basin had to detour due to a derailment or washout somewhere or worse; the coal train itself derailed and will not arrive at the power plant on time? Now that the cycle has been disrupted, how do thing get back to normal? Do power plants stockpile coal with a day or two of lead time, maybe more?

Thanks in advance.

2

Power plants normally do not depend on ‘just in time’ inventory methods. Most plants will have a 15-30 day inventory on hand pending delivery of current purchases. When supply chain disruptions are anticipated the utilities will endeavour to expand their inventories to be upwards of 90 day supply in hand.

3

Don’t worry, its stockpiled.

4

Ted,

Most power plants ‘stockpile’ coal(watch the mound ‘grow’ all summer). I would suspect that most of the power plants here in the Upper Midwest have a 30 day ‘plus’ supply on hand. Back before unit trains, much of the coal was barged up the Mississippi and transfered to the power plant or reloaded for rail shipment if the power plant was further inland. Stock piling of coal for 3-4 months due to river navigation ‘freeze up’ was normal. Now, plants that use NG or fuel oil have huge tanks and need to be supplied on a regular basis - Most of the time they are served by a pipeline.

A few years ago, some power plants did run very low due to high winter demand and track work issues in the PRB. I suspect the affected power pland now have a larger stock pile!

Jim

5

Find a nearby coal-fueled power plant with one of the aerial photo image websites - Google Map or Google Earth, one of MicroSoft’s equivalents, etc. Look at the coal pile in both the vertical (directly overhead) and oblique (sideways) views to see how big those piles can get.

Some years ago, I understood that a 90-day supply was common. That was before deregulation, when the cost of the money that was tied up in the inventory/ stockpiled coal could be “put into the rate base” and legitimately charged to the ratepayers as a justified expense. Now, I understand that such piles are managed more closely, which makes sense, as you’ll see below in a moment.

To put this into perspective, let’s gauge it with just some rough numbers and estimates, rounded off for simple arithmetic and to make it easier to adjust up or down or for “real-world” or other numbers that you may prefer:

Say, 1 train of 10,000 tons = 100 cars at 100 tons of coal each, per day.

90 days of 10,000 ton trains = 900,000 tons.

900,000 tons at $100 / ton delivered cost = $90,000,000 - that’s $90 million !

At an allowable 6 % rate of return on that invested capital,

6 % x $90,000,000 = $5,400,000 = $5.4 million per year in “interest” cost alone !

$5,400,000 per year divided by 365 days = $14,795 per day !

Another way: $5,400,000 divided by 90-day stockpile = $60,000 cost for each day of the stockpile’s size, each year.

This checks - the 10,000 ton daily train at $100 per ton is worth $1,000,000. At 6 %, each such trainload costs $60,000 for an entire year - and 90 such trains would cost $5.4 million for a whole year.

Any wonder why the utilities care about and monitor this so closely ?

My somew

6

Paul, your not just whistling Dixie:

To get an idea about the size of these plants and their coal storage areas go to www.maps.live.com Type in Juliette GA go a bit SSW and zoom in on the plant. That is Southern Company’s (sic Georgia Power) Plant R.W. Scherer. Four 818 MW units with a coal yard built to hold up to 90 days supply of Western Low Sulphur coal. It is one of the largest coal multi unit fossil plants in the country.

The NS folks would be happy to describe the working of the coal loop discharge area. I had a hand in building the thing as well as the plant back in the late 70’s and early 80’s.

Paul your math is pretty good and fairly accurate. It goes without saying that capital intensive industries tend to have to spend a lot to make a lot. I had not heard the term dead storage in many a year.

PL

7

Power plant coal inventory is usually set by law with regulated utilities. The utility has contract with the mines and the railroad to have a minimum on hand (such as 30-45 days) to provide reliability in case of interruption of delivery, but often not more than a maximum such as 90 days, either, so that the ratepayer isn’t tieing up capital in inventory. This is a constant tug-of-war between utilities and regulators, who each have different ideas how much is too little and how much is too much. But before one runs off thinking the problem is with regulators, the unregulated utilities have the same discussion with their owners and investors, too. When you are talking about a plant that burns 15,000 tons of coal a day, and the price of that coal, delivered, is $50/ton (high for PRB but low for Appalachian), then you are talking $68 million dollars sitting there on the ground doing absolutely nothing.

The idea on modern coal handling design is to have a dead pile (reliability inventory) and a live pile, and the plant shall never draw from the dead pile if all goes well. PRB coal in particular has difficult storage characteristics and is subject to spontaneous combustion if there is too high an oxygen content in the pile, or too much air movement. The coal is carefully sized, compacted, and stacked to minimize oxygen content, and temperature monitored to detect combustion. If there’s a temperature rise, the plant digs out the composing coal and spreads it out. There’s a lot of science written about this.

You want to see a utility panic, it’s one with 4-5 days sitting on the ground.

8

One of my brothers used to be an aerial photographer. One of their main gigs was to take aerial photos of coal piles at PRB coal mines. They used the photos to figure volumes in the piles, then compare them with the bokks, and see how closely they matched (?) It sounded like wearing a belt and suspenders at the same time. But, it was a big portion of their photo business.

9

Sounds like good internal control (sorry, an accounting term) to me. A coal mine probably wouldn’t have $68 million in a stockpile (see RWM’s post), but if you were a mine manager doing financial shenanigans, can you think of a better place to hide it? Overstating the stockpile could cover a lot of embezzlement, fraud, etc. The financial peace of mind provided to company management by the aerial photos was probably worth way more than the cost of the photos.