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Vectren might further cut Sunrise Coal deliveries in 2018

Hallador Energy Co.'s Sunrise Coal LLC subsidiary could be facing continued coal delivery cutbacks in 2018 unless coal burn projections improve at Vectren South, an electric utility owned by Evansville, Ind.-based Vectren Corp., according to a new regulatory filing.

Wayne Games, Vectren's vice president of power supply, told the Indiana Utility Regulatory Commission late last week that Vectren South already has reduced Sunrise's coal shipments to contract minimums this year "and intends to provide notice to reduce volumes for each quarter in 2018 unless coal burn projection changes."

While Games did not disclose specific capacity figures for Vectren's A.B. Brown and F.B. Culley coal plants, he said burns increased somewhat during the summer after they were low in early 2017, largely because of mild weather and low natural gas prices. However, Vectren also has experienced some issues "with train deliveries running behind, delaying scheduled deliveries."

Sunrise supplies most of the approximately 4 million tons of thermal coal burned annually by Vectren. Most of that coal comes from the Oaktown Nos. 1 and 2 underground mines in Knox County, Ind. They are expected to produce more than 5 million tons in 2017. Sunrise also blends smaller amounts of lower-sulfur coal from its Ace in the Hole surface mine in neighboring Clay County.

Games said Vectren's coal inventory has been coming down, albeit slightly. The company had 765,564 tons of coal in stockpile as of Sept. 30, a decrease of 5,396 tons from three months earlier.

Vectren South generally targets a coal reserve inventory of 60 to 75 days, he said.

Vectren plans to retire most of its nearly 1,000 MW of coal-fired generation by 2024, keeping open only a 300-MW coal unit at Culley.

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.