Colorado Springs April 23, 2008 AmerenEnergy Fuels & Services

Transcription

1 Back to the Future with Illinois Coal? Colorado Springs April 23,

2 Ameren Corporation Ameren Corporation (NYSE: AEE), has eleven coal-fired power plants: 7 are in Illinois, 3 are on the Missouri- Illinois border, and 1 is fifty miles from the Illinois border. 2

3 Ameren Generation Ameren Corporation total generating capacity= 16,200 MW 9,800 MW is coal-fired (54%), provides 84% of generation 4,400 MW is gas/oil (27%), provides 2 % of generation 1,190 MW is nuclear (7%), provides 12 % of generation 800 MW is hydro (5%), provides 2% of generation 2007 Ameren data 3

4 Ameren Corporation is the 5th largest coal consumer in the United States 1. American Electric Power 76,757, Southern Company 63,296, TVA 46,786, Duke Power 44,959, Ameren 40,684, Texas Utilities 35,893, MidAmerican Energy 33,485, Xcel 29,474, Edison International 25,814, APS (Allegheny Power) 23,182,000 Source: 2006 Data EVA 4

5 Plant Operator Ranking of Illinois Coal Consumers-1989 Tons 1 Union Electric Co. 9,292,000 2 Duke Energy Indiana, Inc. 5,555,900 3 Dynegy Midwest Generation, Inc. 5,351,140 4 Georgia Power Co. 5,187,700 5 Ameren Energy Generating Co. 3,430,400 6 Northern Indiana Public Service 3,135,300 7 Tennessee Valley Authority 2,368,380 8 Kincaid Generation, LLC 2,029,000 9 Gulf Power Co. 1,770, Seminole Electric Coop, Inc. 1,397,000 Source: Illinois Department of Commerce and Economic Opportunity 5

6 6

7 Kerr McGee Galatia Mine November

8 Amax Leahy Mine November

9 Consol Burning Star 4 Mine, March

10 Arch Captain Mine

11 May

12 July

13 Old Ben Mine #

14 Arclar Big Ridge Mine Development

15 Top Consumers of Illinois Coal , , , , , , Union Electric Duke Indiana Dynegy Tampa TVA 4, , , , Tennessee Valley Authority Tampa Electric Co. Dynegy Midwest Generation, Inc. Duke Energy Indiana, Inc. Union Electric Co. Source: Illinois Department of Commerce and Economic Opportunity

16 Ameren Corporation is the largest consumer of PRB coal in the United States 1. Ameren 35,512,000 PRB tons 2. MidAmerican Energy 30,246, Southern Company 29,594, American Electric Power 29,125, Xcel 27,323, NRG 25,399, Edison International 19,202, Detroit Edison 15,830, Entergy 14,938, Alliant 13,813,000 Source: 2006 Data EVA 16

17 With the Clean Air Act of 1990, Emitting SO2 Became Costly with Emissions Allowances Historical SO2 Trades $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 1/5/04 1/4/05 1/4/06 1/4/07 1/4/08 1/3/09 17

18 $140 $120 $100 $80 $60 $40 $20 $0 SO2 Allowances Put Higher Sulfur Illinois Coal at a Disadvantage to PRB Additional Cost of Illinois Coal at 5.2 lb SO 2 /mmbtu Differential $200 $350 $500 $650 $800 $950 $1,100 $1,250 $1,400 $1,550 $1,700 $1,850 $2,000 SO2 $/ton Allowance Price 18 $50 Additional $/ton of ILB coal due to SO2

19 Because of the Clean Air Act, Ameren systematically converted their plants to have PRB capability Rush Island 1993 Electric Energy Inc- Joppa 1993 Labadie 1993 Sioux 1994 Newton 1998 Meramec 1998 Meredosia 2003 Edwards 2005 Coffeen 2006 Hutsonville 2006 Duck Creek

20 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Ameren Coal Use Illinois Basin vs. Western Year Illinois Basin Western Percent

21 Illinois Coal Production Source: Illinois Department of Commerce and Economic Opportunity 21

22 2005 Clean Air Interstate Rule (CAIR) Requires even more stringent SO2 controls o 2006 State Implementation Plans Due o 2009 Phase I Cap for NOx o 2010 Phase I Cap for SO2 Every ton SO2 emitted requires 2 SO2 allowances o 2015 Phase II Cap for NOx and SO2 Every ton SO2 emitted requires 2.86 SO2 allowances Ameren has begun scrubber installations o Three plants will have new wet scrubbers by the end of 2009 o Ameren intends to install all wet scrubbers capable of handling either PRB or Illinois basin coal Plentiful limestone supplies in close proximity to our plants 22

23 Advantages of Illinois Coal 1. Higher BTU-Ameren plants were designed for Illinois coal 2. Less Impact of Transportation Rate Increases- Typically 50 miles Illinois mine to plant distance versus 1200 miles PRB mine to plant distance 3. Less Impact of Diesel Fuel Surcharges with shorter distances 4. Lower Railcar Costs and Maintenance 23

24 Advantages of Illinois Coal 5. Scrubbers remove the SO2 penalty of Illinois coal, and also can provide mercury control without the carbon injection that may be necessary for PRB 6. State of Illinois provides subsidies for Infrastructure Development and there are supportive state politics for new mine development 7. Lower CO2 emissions (3-5%) versus PRB 24

25 Disadvantages of Illinois Coal 1. Mines will need to be developed to serve new demand o o o Challenging construction environment Challenging finance environment Challenging permitting even in supportive state 2. Less flexibility to switch sources-long term contracts required 3. Less flexibility to deal with disruptive events 4. Higher NOx generation 25

26 What are the Economics of PRB versus Illinois coal? 26

27 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Basic Economics of IL vs PRB Using PUBLIC Data-COAL PRICE Argus Weekly Coal Prices 11/07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/ /07/2008 Illinois Basin: IL/IN Mine PRB: FOB Mine/Rail 8800, /07/ /07/ /07/ /07/ /07/2005 ($/ton)

28 Basic Economics of IL vs PRB Using PUBLIC Data-COAL PRICE PRB 8,800 btu/lb 0.8 #SO2/mmbtu $14.79 IL 11,000 btu/lb 6.0 #SO2/mmbtu $

29 Basic Economics of IL vs PRB Using PUBLIC Data-COAL TRANSPORTATION Source: Congressional Research Service Report, 9/26/07 29

30 Basic Economics of IL vs PRB Using PUBLIC Data-FUEL SURCHARGE March 2007= $

31 Basic Economics of IL vs PRB Using PUBLIC Data-SCRUBBED SO2 COST Use scrubber costs $260/ton SO2 for Illinois coal and $1600/ton SO2 removed for PRB coal Source: EEI Utility Air Regulatory Group, June 2007 Report 31

32 Basic Economics of Four Components of Fuel Cost IL vs PRB Using PUBLIC Data (NOT Ameren data) Illinois Coal $33.50 (fob mine Argus 3/07) 2.09 (6.25% IL tax) 5.00 ($500/day revenue req.).88 (Fuel surcharge OHD=$3.88) (UARG SO2 scrub cost ) $59.29/ton Total or $ 2.70/mmbtu PRB Coal $14.69 (fob mine Argus 3/07) 0.92 (6.25% IL tax) (GRS study 1200 miles) 4.70 (Fuel surcharge OHD=$3.88) (UARG SO2 scrub cost) $48.87/ton Total or $ 2.78/mmbtu 32

33 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Back to the Future 2015? Ameren's % of Illinois Basin vs. Western Year Illinois Basin Western ILL-Proj West-Proj Percent

34 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Back to the Future 2015? Ameren's % of Illinois Basin vs. Western Year Illinois Basin Western ILL-Proj West-Proj Percent

35 Summary With wet scrubbers and current market conditions, Illinois coal can compete with PRB Choice of PRB vs IL is Site-Specific in Illinois -Over 30 cost parameters involved in evaluating which coal to use Compliance requirements are in flux Would need to time travel to determine what will happen with Illinois basin coal in the future 35

36 With Illinois Coal? Thank You 36