By Tyler Godwin

August 22, 2019 - Contura Energy signed a three-year deal to supply 1.25 million st of Northern Appalachia barge coal to Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), while the utilities also added an additional 300,000 st of barge coal for 2019 to its long-term contract with Murray Energy, according to regulatory filings made public Wednesday.

Deliveries of the barge coal from Contura, which will come from the Pittsburgh #8 seam at the Cumberland mine in Greene County, Pennsylvania, 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 100,000 st in 2020 and 575,000 st in both 2021 and 2022 at a base price of $40/st.

The coal will be delivered in barges at the Alicia Dock on the Monongahela River.

Typical specifications of the coal include a minimum monthly average of 13,000 Btu/lb, maximum sulfur content of 5.15 SO2 lbs/MMBtu, max ash level of 8.75% and max moisture content of 7%.

All shipments will be sampled and analyzed by the seller and any coal with a heat content that is less than 12,600 Btu/lb, sulfur SO2 content above 5.5 lbs/MMBtu, ash content level above 9.75% or moisture above 9% will be rejected, according to the filing.

Through the first five months of 2019, the Cumberland mine delivered over 2.51 million st of 12,828 Btu/lb coal to power plants at an average delivered price of $54.32/st, according to data from the US Energy Information Administration. The majority of the coal went to three power plants, with 732,741 st going to Longview Power's Longview Power Plant, 533,670 st to the Buckeye Power-operated Cardinal Plant, and 424,375 st to First Energy's Fort Martin Power Station.

Murray Adds 300,000 St of Deliveries in 2019

The utilities also added 300,000 st of deliveries in 2019 to its existing six-year contract with Murray Energy, according to the filing.

The agreement, which started in 2017, is now for 7.3 million st of coal for deliveries from various Murray coal mines, including its majority-owned subsidiary, Foresight Energy, through December 31, 2022.

In 2019, the base quantity to be delivered to the utilities was increased by 300,000 st to 1.05 million-1.55 million st, with quarterly nominations between 187,500 st and 462,500 st.

It is the intention that the entire 300,000 st will come from Foresight's MC#1 mine in Franklin County, Illinois, according to the filing. The mine delivered 891,890 st of coal to LG&E and KU power plants through the first five months of 2019 at an average delivered price of $44.36/st, according to EIA data.

In 2020 and 2021, base quantities are still between 1.75 million-2.25 million st, while the 2022 base quantity is for up to 2 million st.

Under the new agreement, Murray can also deliver coal from its Pride Mine in Muhlenberg County, Kentucky, and Genesis Mine in Ohio County, Kentucky.

Base price for the coal will depend on the dock and the cumulative volume range. For example, the first 1 million tons through the Sitran Dock is at a base price of $34.20/st, while the Ohio and Marshall County Docks is at a base price of $33.20/st, and the price through the Island and Western Kentucky River Docks is $33.30/st.

LG&E and KU, 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.