Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 4, 1995 TAG: 9510040042
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
Draper said AEP, Columbus, Ohio-based parent of Roanoke's Appalachian Power Co., will continue to rely on coal for about 90 percent of its power production. He said the company recognizes the strategic price advantage that coal gives as a low-cost supplier of electricity.
The most important challenge facing the utility industry is the issue of customer choice and competition, Draper said, noting that AEP was reorganizing itself to meet the challenge. "It is more urgent for coal suppliers to understand it, because customer choice will give you the best clues as to how your customers in the electric power business will behave," Draper warned the coal producers.
Draper spoke at the Virginia Coal Council's annual conference at Hotel Roanoke and Conference Center. He was joined on the platform by other utility executives; Bill Bales, Norfolk Southern Corp.'s senior vice president for international marketing; and Rep. Rick Boucher, D-Abingdon, who represents the Southwest Virginia coal counties.
AEP is working to extend the useful life of its coal-fired power plants to 50 years or more, Draper said. The company doesn't expect to build any new plants until the next decade, except for some small gas-turbine plants for use during periods of peak demand, he said.
AEP burns more coal each year than any other U.S. electric utility. The company's annual coal bill runs about $2 billion, equal to 36 percent of its $5.5 billion in annual revenues, Draper said. Last year, AEP, which operates 16 coal-fired plants, burned 48 million tons of coal, including 2.5 million tons of low-sulfur Virginia coal, he said.
Draper took the opportunity to talk about delays in the company's obtaining permission from the U.S. Forest Service to build a disputed 765-kilovolt line between Oceana, W.Va., and Cloverdale. The line is needed, he said, to provide reliable service to Western Virginia, and delays mean AEP will have to look at building gas turbines in central and south central Virginia earlier than it would otherwise.
He is "disappointed" and "frustrated" by the delays, Draper said.
Like Boucher, Draper urged continued cooperation among utilities, coal producers and railroads in dealing with governmental regulatory issues. "Our interests coincide greatly in areas of environmental policy, electricity rate-making and many other regulatory functions," he said.
Boucher said it is important that the partnership among the three industries continue. Because recent data show the nation may not reach its clean-air goals for the year 2000, some may push for tighter regulations on burning coal, Boucher said. Cooperation will be needed to maintain more of a voluntary approach toward solving the problem, he said.
Norfolk Southern's Bales reported that the railroad's coal export business this year showed an increased demand for both steam coal used by utilities and coking coal used by the steel industry. Through September, NS handled the export of 22.2 million tons of coal, compared with 20.5 million tons for the same period last year.
The trend holds true for the nation as a whole, he said, adding that the United States should export around 84 million tons this year, compared with 72 million tons in 1994. The real growth in world-wide demand in the years ahead will be for utility coal rather than steel coal, he said.
Strong demand for coal in the Far East could draw South African coal away from Europe and create more demand for U.S. coal there, Bales said. Additionally, NS is looking at nontraditional markets even in such coal-producing countries as the Ukraine and Poland, he said. NS moved its first train load of coal to Mexico on Monday, he said.
by CNB