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Duke Energy ranks No. 2 in U.S. for coal spending

Duke Energy Corp ranks second among U.S. utilities for spending on coal to produce electricity. And the Carolinas and Florida — Duke’s largest markets — rank in the top 10 states for coal spending.

Those are among findings of a new study by the Union of Concerned Scientists on electricity production from coal in the United States, titled Burning Coal, Burning Cash: Ranking the States That Import the Most Coal.

The report is based on 2012 figures — the most recent available. It updates the organization’s Burning Coal, Burning Cash report published in 2010.

Jeff Deyette, the union’s assistant director of energy research, says Duke has actually done a good job in reducing its use of coal, even though it climbed from fourth to second in the report.

That is because the 2010 report, based on 2008 coal use, included Progress Energy Inc. as a separate company. Duke bought Progress in 2012, and the coal use of the two companies is combined in the update. So even though more coal use is attributed to Duke in 2012, Duke/Progress combined cut its coal use by a third.
National trends

Deyette says part of that was due to the recession, which ravaged the economy in 2009. Energy consumption has not returned to pre-recession levels yet. And part was due to increased use of natural gas because of record-low prices attributable to domestic shale production.

Those factors are true nationwide, Deyette says. But Duke also has been ahead of most U.S. utilities in retiring older, inefficient coal plants — an important factor in reducing carbon emissions. In addition, Duke has been able to cut the price it pays for coal by using the buying power it acquired through the merger with Progress.

Deyette says Duke still has inefficient plants to retire, as do utilities throughout the nation. The union released its update to focus attention on the need to continue to reduce coal consumption.

Duke spent $2.22 billion to buy and transport coal for use in its utility power plants in 2012. It was second behind the The Southern Co. (NYSE:SO), based in Georgia, which topped Duke by about $20 million in total coal costs.

In 2010, Duke spent $1.83 billion for coal. It ranked fourth in the nation behind Southern, the Tennessee Valley Authority (NYSE:TEV) and American Electric Power Co. Inc. (NYSE:AEP), based in Ohio. Progress ranked fifth that year, with $1.5 billion spent on coal.

State rankings

Deyette’s report also ranked the states that spent the most on importing coal in 2012.

Texas led the states, spending $1.85 million on net coal imports. North Carolina spent $1.76 billion to rank second. Florida spent $1.27 billion for fifth place, and South Carolina spent $1.14 billion for seventh place.

Ranked by per-capita spending, South Carolina is first. It spent $242 per person on importing coal. North Carolina, in eighth place, spent about $180 per person.

North Carolina in particular has benefited from the reductions in coal use at Duke and Progress. Many of the plant retirements have been in this state.
Economic sense

In 2012, North Carolina cut its spending on coal by 25 percent from 2008, even though coal is more expensive now. Florida cut its spending by 18 percent. Only South Carolina increased its spending. Its expenses rose 4 percent, largely because of increased prices.

Cutting the use of coal is good for the economy of those states, Deyette says. None produce coal, and it is particularly expensive for those states. So reduced use of coal means less money heading out of state to pay for it.

North Carolina pays about $94 per ton for coal, among the highest prices for the mainland United States, Deyette says. South Carolina’s price is similar, and Florida pays $88 per ton, also a high price nationally.

Source: www.bizjournals.com