Burlington Northern Must Provide Emergency Coal-Delivery Plans

WASHINGTON (Minneapolis Star Tribune/TNS) -

Responding to utilities’ complaints about coal deliveries, federal regulators have ordered BNSF Railway to submit a plan for keeping power plants in Minnesota and other states supplied this winter.

In its order, the U.S. Surface Transportation Board cited the supply problems of Minnesota Power Co. and Otter Tail Power Co., and said that a key concern is “the railroad’s ability to promptly and effectively redeploy resources in the event that unanticipated circumstances cause one or more regionally significant generating stations to reach critical stockpile levels.”

In the past year, coal shortages forced some power plants to curtail generation of electricity, including five operated by the two Minnesota-based utilities.

BNSF had fought the request of a coal-users trade group to require the railroad to specifically explain how it would deal with critical shortages. But railroad spokesman Mike Trevino said, “BNSF will comply with the STB’s request for a contingency plan for coal emergencies and we do not anticipate any particular difficulties with compliance.”

Midwest utilities rely heavily on coal. On Tuesday afternoon, 58 percent of the electricity generated for the 15-state midcontinent grid came from coal power plants, according to real-time grid data.

Minnesota’s three investor-owned utilities said coal supplies have improved at their power plants. Still, utility officials said they welcomed the order as a path toward a longer-term solution to rail congestion.

Otter Tail Power Co., the Fergus Falls, Minn.-based utility that reduced output to save coal at its Big Stone power plant in South Dakota, said that conservation measure ended Jan. 1, after coal-train cycle times improved in December.

“Although the stockpile isn’t up to normal levels even for summer operation, we’re confident deliveries nearly will match coal burned for generation,” spokeswoman Cris Oehler said in an email.

At Xcel Energy, the state’s largest electric utility, Craig Romer, director of fuel-supply operations, also said coal inventories have improved and “we are still closely monitoring the situation, hopeful the inventories will return to optimal levels in the near future.” Romer added that the Minneapolis-based company is “supportive of any regulatory action that would improve rail service to our coal-fired plants.”

Minnesota Power, the Duluth, Minn.-based utility that powers the Iron Range, had curtailed output at four coal-burning plants last fall, but all are operating again as fuel deliveries improved, said Al Rudeck, vice president of strategy and planning.

Even so, he said, the utility remains concerned that rail deliveries have been inconsistent. “The variability … in the last two years is not something we have seen before,” Rudeck said in an interview.

By Jan. 29, BNSF must provide “a detailed description of the steps it takes to identify coal-fired plants at critical levels and to remedy acute shortages in a timely fashion.”

Minnesota’s U.S. Senators, Democrats Amy Klobuchar and Al Franken, had pushed the transportation board to take action after hearing from power companies worried about continuing delays in coal deliveries and the prospect of unexpected weather emergencies like last winter’s severe ice and snow and brutally low temperatures.

“With winter weather bearing down on Minnesota, rail companies like BNSF need to have plans in place to ensure that utilities have enough coal to heat homes and businesses and prevent prices from skyrocketing for consumers,” Klobuchar said in a statement Tuesday. “I’m pleased that the STB responded to our calls for action, and I’ll keep pushing to address future shortages and protect families in Minnesota and across the country.”

Franken promised to do the same.

“Disruptions in rail service caused rising prices and subpar service across Minnesota,” Franken said in a statement. “I’m glad that we’ve seen action taken to direct BNSF to report how they would respond to dangerously low coal supplies at power plants that they serve.”

The STB order does not include enforcement measures requested by the Western Coal Transportation League. But Franken said he would “push for stronger action from the STB if the situation worsens again.”

At a December meeting of the Federal Energy Regulatory Commission, Minnesota Power Vice President Dave McMillan said that at one point during 2014, the company’s coal reserve slipped to just four days.

The STB noted that BNSF coal trains are running at an average speed of 17 to 19 miles per hour. “This remains below recent historical levels (2009-mid 2013), which ranged from 20 to 24 (miles per hour),” the board said.

In a 10-week period examined by regulators, BNSF met its coal-loading plans for five weeks and missed them for another five.

BNSF has told the STB that it closely monitors utilities whose coal reserves dip below 10 days “to ensure that the customer does not run out of coal.” Power companies typically want 30-day stockpiles.