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Arch Coal Signs Three-Year Deal With Kentucky Utilities



By Tyler Godwin and Bill Montgomery

August 2, 2019
- Arch Coal signed a three-year deal to supply at least 1.35 million st of Powder River Basin coal to Louisville Gas and Electric and Kentucky Utilities' Trimble County Generation Station along the Ohio River, according to a regulatory filing made public Thursday.

Deliveries of the rail-delivered coal, which will come from the Black Thunder complex in Campbell County, Wyoming, will start on January 1, 2020, and continue through December 31, 2022, according to the filing published by the Kentucky Public Service Commission.

The deal is for a firm volume of 450,000 st annually, with a maximum volume of 700,000 st/year.

Base price for the coal will be $12.15/st in 2020, $12.50/st in 2021 and $12.90/st in 2022, and will be delivered in 12,000 st-16,000 st unit trains on the BNSF/Union Pacific joint line.

The Black Thunder mine, which is the second-largest coal mine in the US, produced 71.13 million st of coal in 2018, only trailing the 98.31 million st produced from Peabody Energy's North Antelope Rochelle Mine, according to data from the US Mine Safety and Health Administration.

Coal specifications include a heat content of 8,900 Btu/lb, maximum sulfur content of 0.8 SO2 lbs/MMBtu, ash level of 5.5% and moisture content of 27%.

All shipments will be sampled and analyzed by the seller, and any coal with a heat content that is less than 8,650 Btu/lb, sulfur SO2 content above 1.2 lbs/MMBtu, ash content level above 7% or moisture above 30% will be rejected, according to the filing.

Through the first five months of 2019, 1.49 million st of coal was delivered to the Trimble County Generation Station, including 220,829 st from the Black Thunder mine, according to data from the US Energy Information Administration. The 220,829 st had an average heat content of 9,005 Btu/lb at an average delivered cost of $39.58/st.

Louisville Gas and Electric and Kentucky Utilities, part of the PPL Corporation, are regulated utilities that own 8,471 MW of generating capacity in the winter and 8,180 MW of capacity in the summer. Coal represents 89.9% of LG&E's power generation and 82.1% of KU's power.