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East Kentucky co-op to terminate 1 coal supply contract with Alliance

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East Kentucky co-op to terminate 1 coal supply contract with Alliance

East Kentucky Power Cooperative Inc. will not extend one of its coal supply contracts with Alliance Resource Partners LP when it comes due at the end of this year, according to Mark Horn, manager of fuel and emissions for the Winchester-based generation and transmission co-op.

Horn confirmed in an interview with S&P Global Platts that he will not extend the Alliance contract for an additional three years and, instead, will terminate the pact when it is scheduled to expire Dec. 31.

Horn did not disclose other information about the affected contract or his decision, which was referenced in a Kentucky Public Service Commission filing last week.

East Kentucky has "multiple contracts with Alliance, and this is one of them," he said in the interview.

Specifically, East Kentucky is continuing a multiyear contract with the Tulsa, Okla.-based company that underwent negotiations leading to a price cut earlier this year.

East Kentucky is buying 1.44 million tons per year through December 2020 under that arrangement with Alliance's River View underground mine in Union County, Ky. This year, the co-op is paying a base price of $49.75 per ton for minimum, 11,500 Btu/lb coal, which is set to fall to $36 per ton starting in 2018, then rise slightly to $37 per ton in 2019 and finally to $38 per ton in 2020.

Bob Matyi is a contributing reporter to S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.