Plenty of coal in US hoppers -- if strike is a short one
New York — The nation's businesses and utilities will be able to withstand a short coal strike. Should the strike drag on beyond May, however, coal stockpiles -- now high -- will begin to dwindle and electrical curtailments and layoffs will begin.
The nation's utilities have about a 100-day supply of coal on hand, the Edison Electric Institute in Washington reports, while the industrial users of coal -- mainly the steel industry --according to the Department of Energy. "The utilities are in fairly good shape," says Jack Schenck, a vice-president of the institute, adding, "The spring is the period of lowest demand, and warm weather this spring has reduced demand even more." And, with industrial production lagging, the large steel companies are not drawing down on their stocks quickly.
For utilities east of the Mississippi, this report rings true. A spokesman for Public Service Electric & Gas Company, in Newark, N.J., says, "We assumed last fall that coal deliveries would be affected because of a stroke, so our supplies for our Hudson and Mercer generating units have been built up." At the Hudson plant, which produces 600 megawatts of electricity, the company has 125 days of coal supplies. At the Mercer plant, which has two 300-megawatt units, it has 145 days of coal. The company produces 29 percent of its electricity from coal and serves 1.7 million customers in New Jersey.
Another large utility, Philadelphia Electric Company, serving 1.3 million customers, says it has a 90-day supply, which will get it into June "before we have to consider full conservation measures." Like a lot of other utilities, it will schedule some maintenance on the units during the strike in order to conserve its coal stockpiles. About 25 percent of its electricity is produced by coal, while 32 percent is nuclear. And, like a lot of other utilities, it has spare oil-fired generators, used for peak periods, which it can fire up to help meet some of the demand.
Still, there is the potential for problems should the strike be as long as the last one, three years ago, which lasted 111 days. Even a shorter period would cause problems. For example, Philadelphia Electric owns two other facilities in conjunction with Public Service Electric & Gas. These two plants, the Keystone and the Conemaugh, have only a 60-day supply of coal on hand.
The memory of the last strike is also fairly strong at some utilities. At Duquesne Light Company, in Pittsburgh, a spokesman recalls that the utility had to curtail customers. "We were hurt more than anybody else," the spokesman says , "due to our proximity to the coalfields -- we couldn't get any fresh supplies at all." Duquesne now has a 90-day stockpile.
Most utilities and industrial users, however, will be getting fresh but limited supplies of coal in from either nonunion or non-United Mine Workers mines in the western part of the United States. Mr. Schenck notes that about 40 percent of the 568 million tons of coal mined in the US last year came from Western mines. By 1990 this will increase to 50 percent.
In anticipation of the strike, many of the utilities and companies stockpiled coal. Consumption of coal is down from last year, but production of the fuel is up 6 percent for the first quarter. At the same time, prices on the spot market for both metallurgical and steam coal are higher than a year ago, even though demand was stronger then.
Some of the big industrial users of coal are playing it close to the vest. For example, US Steel Corporation, the nation's largest steelmaker and a major user of coal to make coke, one of the ingredients of steel, said it had absolutely no comment on the strike. But a spokesman for Bethlehem Steel said the company believed its current coal supplies were "adequate to meet the needs of its steel operations for a reasonable period of time."
Bethlehem's largest facility, at Sparrows Point, in Maryland, uses 2.6 million tons of coal annually. The company would not say how much coal it uses as a whole or how much it had stored.
Whatever the terms of the settlement between the coal companies and the United Mine Workers, there is little doubt that the added cost will be borne by the consumer. Almost without exception, utilities have the ability to pass on higher fuel costs. The rejected contract would have added an additional $2.50 per ton to the price of coal.
But observers don't expect to see much change in this --despite the new negotiations -- as the major dispute concerns a royalty on nonunion coal. The $ 2.50 additional cost is not quite 10 percent of the price of a ton of coal. Because coal accounts for about 35 percent of the cost of all the electricity produced, it will add from 3 to 4 percent to the cost of the consumer's electric bill.
The strike will affect utilities not only here, but also abroad. Coal exports have surged recently as soaring oil prices have led foreign utilities and companies to switch to coal. According to informed sources, however, it is likely that there has been stockpiling.
"Like our domestic customers," one source said, "we believe our foreign ones have stockpiles coal, although we don't know how much." And coal is still moving at the docks. A spokesman for the National Coal Association estimates that there is between 2 1/2 and weeks of supplies still in the pipeline before the armada anchored off of Hampton Roads, Va., sits with empty holds.