Coal Age

DEC 2012

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news continued planned under a deal brokered by Chicago Mayor Rahm Emanuel. Over the next several years, Midwest Gen is facing the expenditure of several hundred million dollars to install pollution controls on the four operating plants to meet government mandated air quality regulations. Midwest Gen is a merchant generator, meaning it sells electricity from the plants into the wholesale market. The company has been hurt by low power prices that have dogged the wholesale market for months. Altogether, the four plants generate more than 4,200 mw of electricity. Coal Transportation Costs Continue to Climb The Energy Information Administration (EIA) reports that the average cost of shipping coal by railroad to power plants increased by almost 50% from 2001 to 2010, with rail transport accounting for more than 70% of U.S. coal destined to the electric power sector. For various reasons, states the report, transportation costs accounted for 40% of the average overall cost of coal delivered at electric power plants in 2010. Nationwide the average, nominal U.S. rail rates for shipping coal grew from $11.83/ton to $17.25/ton from 2001 to 2010. Historically, shipping rates grew slowly in the beginning of the decade before increasing almost 11% in 2005—the year twin derailments struck the Powder River Basin's (PRB) heavily travelled Joint Line, affecting rail transport nationwide. From 2005 until the on-set of the Great Recession, rates have continued to grow at a relatively robust pace. But even the impacts of the recession on transportation rates was short-lived as rates grew by more than 9% in 2010—particularly as coal exports shifted traffic patterns. "National numbers can be misleading, however, as regional dynamics tend to vary considerably among the six major coal basins," the EIA said. "For example, Southern Appalachian coal costs increased more than 10% annually in 2001-10, while PRB rates grew 1.5% over State-to-state Percent Change in Real Rail Transport Rates the same period. For per Ton to Electric Power Sector, 2001 Through 2010 a few PRB destination states, rates fell during this period." Though rail transportation costs for Appalachian and Illinois Basin coals as a percent of total delivered cost fall in the low 20% range, the relatively low cost of PRB coal, and the long distances it travels, results in transportation costs that averaged almost 60% of the total delivered cost in 2010—more than the cost of the coal itself. 24 www.coalage.com In this latest release of Coal Transportation Rates to the Electric Power Sector, EIA has significantly expanded upon prior versions of this report with the incorporation of new EIA survey data. Another feature of this latest release is the incorporation for the first time of coal transport rates by barge and truck. Clean Coal Technologies Reaches Settlement with SEC Clean Coal Technologies, an "emerging cleaner-energy company," has reached a settlement in a case filed by the Securities and Exchange Commission (SEC) on June 4, 2012, in the U.S. District Court for the Southern District of Florida against Clean Coal and its former CEO and president, Douglas Hague, alleging involvement by Hague in two fraudulent transactions of restricted stock in 2009 during his time as CEO and president of Clean Coal. Under the terms agreed to by Clean Coal and the SEC, Clean Coal, without admitting or denying liability, would pay a civil penalty of $25,000 and would be permanently enjoined from violating certain securities laws. The settlement remains subject to approval by the court, which must approve its terms and enter the final judgment. Clean Coal Technologies holds patented process technology and other intellectual property that converts raw coal into a cleaner burning fuel. The company's trademarked end products, "Pristine" coals, are significantly more efficient, less polluting, more cost-effective, and provide more heat than untreated coal. Coal-fired Power Plant Construction Projects on the Rise Worldwide Across the globe there are approximately 1,200 coal plants with an installed capacity of 1.4 million mw now on the drawing boards, according to Global Coal Risk Assessment, a new report from the World Resources Institute (WRI). WRI is a non-governmental organization (NGO) working to reduce coal consumption. The research sheds light on increasing coal consumption trends worldwide much to the WRI's chagrin. Most of the proposed new plants are in China and India, which account for 76% of proposed capacity. Turkey and Russia also have big plans. And, a growing number of coal plants are being proposed for developing nations that are looking for inexpensive sources of energy to fuel economic growth. According to the report, China has a significant number of coal-fired power projects in the pipeline. As of July 2012, China proposed adding 363 coal-fired plants with a combined capacity exceeding 557,938 mw. China's 12th Five-Year-Plan approved 16 giant coal-power bases, mainly in the northern and northwestern provinces of Inner Mongolia, Xinjiang, Shanxi and Shaanxi. India's coal-fired power capacity is rapidly expanding, similar to China's experience over the last 10 years. Research identified 455 proposed new coal-fired power plants in India, with a total installed capacity of 519,396 mw. These projects are spread across 18 states, with the largest concentration in Andhra Pradesh (southeast coast), Chhattisgarh (interior state), Maharashtra (southwest coast), Orissa (northeast coast), Madhya Pradesh (interior state) and Jharkhand (interior state). To view the whole report, go to http://pdf.wri.org/global_coal_risk_assessment.pdf. December 2012

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