THE RECENT SLOW-DOWN IN RAIL SHIPMENTS OF WESTERN coal has begun to claim victims in the electric utility industry. One of the largest in recent years, the current fuel "shortage" has hit big investor-owned utilities, small municipalities and co-ops. Increased alternative fuel and replacement purchased power cost utilities more than $150 million in 1997.
Union Pacific rail system is the source of most of the slow-down in western coal deliveries. As the company works to integrate recently acquired Southern Pacific railroad into its operations, it has encountered many difficulties. Creating the largest railroad system in the United States is no easy task.
UP coal car loadings have declined steadily since spring 1997. As of early November, UP loadings were down 25 percent from the first two months of 1997. Plants in the Dallas-Fort Worth to Houston corridor experienced the first major delivery decline due to rail congestion. Now, plants all over the U.S. are feeling the pinch. Collectively UP provides transportation services to more than 75,000 MW of coal-fired generation.
Utilities have responded to the slowdown by cutting back on wholesale power sales from coal units and curtailing coal-fired generation during non-peak hours. Affected coal units are operating at 75 percent of their normal levels; natural gas generation is providing the bulk of the replacement generation.