MISO to seek weekly fuel data due to high risk of winter coal supply problems

About 20% of the coal-fired fleet in Midcontinent Independent System Operator is at high risk for fuel supply problems this winter, and MISO is going to collect weekly fuel data from generators to stay on top of the issue, MISO officials said Dec. 10 at a Reliability Subcommittee meeting.

"Some argue that coal for 2022 is already sold out. It is looking really tight," Mike Mattox an advisor at MISO, said at the meeting. Some generators are also worried it will be difficult to get the supplies they need for emission controls, he noted.

While most winter coal supply concerns eased nationwide due to milder-than-expected temperatures, MISO faces unique reliability challenges looking into the first quarter of 2022. As the largest coal-burning region in the US, MISO sources coal primarily from the Powder River Basin where spot coal prices have been particularly volatile.

January-delivered PRB 8,800 Btu/lb coal was assessed at $29.50/st Dec. 9, unchanged from the previous three sessions and the lowest since $29.50/st Oct. 11. The recent downward PRB price trend marks a reversal of the coal's summerlong price climb into late fall after maintaining an all-time high price of $35/st as recently as Nov. 9. Despite falling prices, no new prompt-month PRB trades were reported for January-delivered cargoes amid a wide bid/offer spread and mostly tapped out suppliers.

Coal issues

MISO conducted a survey of generators this fall and found that companies representing 9.3 GW of coal-fired generation are at high risk of having insufficient coal supply and transportation contracts to meet their anticipated needs, according to a MISO presentation.

Meanwhile, companies representing 17.6 GW of coal-fired plants are concerned their coal contracts will not be fulfilled due to supply or transportation issues, the presentation said.

The grid operator received survey responses from 22 companies representing 43.3 GW of the 52.6 GW of coal generation in the region, the presentation said.

MISO's independent market monitor has been contacted by about 15 companies to discuss concerns about 14 GW of coal-fired generation, the presentation said.

Considering this fuel supply risk, MISO is implementing a weekly data request to generators that use coal, oil, natural gas, and pet coke, the presentation said. The request will ask questions such as how many hours the unit can run on current fuel supply and whether the site is anticipating any challenges or delay in fuel procurement, the presentation said.

The data request is mandatory and it will only be required through the winter, J.T. Smith, senior director of MISO operations, said at the meeting. The data will provide situational awareness so the MISO can talk with generators about the need to conserve coal before expected cold weather.

Generator concerns

Some generators chafed at the new requirement. If a generator has less than 30 days of fuel supply, they should contact MISO and the IMM, said Kari Hassler, senior manager of market operations at Xcel Energy. But it is inefficient to require companies with large fleets to fill out the weekly form for each unit, whether they have a coal supply issue or not, she said. "We are very unhappy with this," she said.

Similarly, Chris Norton, director of market regulatory affairs with American Municipal Power, asked whether it would be possible to fill out the request just once for the company's mine-mouth coal plant.

It may be possible to tweak the request so a generator can check a box that it has 30 days of fuel onsite and then avoid filling out the rest of the form, Smith said. But he added that he was "flabbergasted" that some stakeholders did not think it was necessary for MISO to collect the fuel data for reliability.

But other stakeholders said that MISO is making the right call. "I really appreciate MISO's proactive management of this situation," said Hwikwon Ham from the Minnesota Public Utilities Commission. Hopefully generators can manage this requirement for the next ten weeks so that stakeholders can have more confidence in MISO's reliability, and then MISO can work on a more surgical solution in the future, he said.