The higher burn also was cheered by coal producers, mostly in the high-sulfur Illinois Basin, that sell the 14 million-15 million tons of steam coal consumed annually by the subsidiaries of Pennsylvania’s PPL Corp.
Michael Dotson, fuels manager for LG&E and KU, said the increased burn would not necessarily, or immediately for that matter, translate into additional coal purchases by the two utilities. That is because they are still working through a large, though unspecified, coal inventory backlog that has persisted since last year.
Dotson was hoping the winter of 2015-2016 would feature more cold weather in February and March. Most weather projections, were calling for somewhat warmer than normal temperatures in Kentucky for the remainder of winter.
Weather — both the winter and upcoming summer — likely will dictate whether LG&E and KU return to the spot coal market in 2016. If temperatures are mild, Dotson does not expect to buy additional coal this year. If they are more extreme, cold in February and March and hot this summer, then coal purchases are possible.
LG&E and KU have not yet awarded final contracts off a formal high-sulfur coal solicitation last fall for up to 3 million tons for several years starting in 2017.
The coal will be bought for the utilities’ four major baseload coal plants totaling more than 5,000 megawatts; 1,932-megawatt Ghent, 1,472-megawatt Mill Creek, 1,274-megawatt Trimble County, and 739-megawatt E.W. Brown.
Last year, LG&E and KU retired about 800 megawatts, or 13%, of their coal-fired generation when the Cane Run, Green River and Tyrone plants were shuttered, mainly because of the federal Environmental Protection Agency’s new pollution rules.
In their place, the utilities completed construction last summer on Kentucky’s first combined-cycle natural gas plant, 640-megawatt, $563 million Cane Run Unit No. 7 near Louisville.
Altogether, LG&E and KU serve about 1.2 million customers. They owned almost 8,000 megawatts of generation, mostly coal-fired.