IPP scrambling for coal

Falling production levels of Utah coal have created a desperate situation for the state's largest coal-fired power plant.

The Intermountain Power Project in Millard County — which sells nearly 75 percent of its generated electricity to California cities — is scrambling to meet stockpile requirements.

"The coal situation in Utah right now is very, very difficult," said Reed Searle, general manager of the Intermountain Power Agency. "Our coal pile surplus is way under what our guidance is. We are eating into that surplus, and thank God we had the surplus or we couldn't have run the plant."

According to a report released this week by the Utah Energy Office, coal production fell in 2003 for the second consecutive year to 23.1 million tons, down from 25.3 million tons a year earlier.

The mine sale price for Utah coal decreased to $16.64 per ton in 2003, compared to $18.47 in 2002. In 2003, total revenues fell below $400 million for the first time in 16 years.

Yet while prices and production levels may be falling, coal distribution to electric utilities is skyrocketing due to Utah's growing demand for power. Roughly 85 percent of Utah's coal in 2003 was delivered to electric utilities at home, across the nation or overseas. Ninety-three percent of all electricity generated in the state can be traced to the burning of coal.

"We own two of our mines, and neither one is producing anywhere near their budgeted production levels," Searle said. "We are not meeting our delivery requirements to others in the state of Utah. We're having trouble getting shipments via the railroad. For the first time in quite a while, we're taking truckloads of coal again."

The falling production levels can be traced to a number of reasons, including lower quality coal, the shutdown of the Skyline Mine in Emery County and dangerous gases that have shut down or delayed production in other mines.

Searle said IPP has historically used Utah coal to generate its electricity. Now the plant is having to import coal from surrounding states at higher prices.

"I won't comment on the price of coal," Searle said. "If you look at 2004 data you will find an entirely differently story. The price is substantially over $20 (per ton)."

Dave Eskelsen, a spokesman for Utah Power parent company PacifiCorp, said he is unaware of any transportation constraints in coal reaching the company's three coal-fired plants.