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CSX rejects blame from Tampa Electric for low coal supplies

Reduced output at coal mine has led to lower coal volumes to TECO, CSX says

A train hauling coal. (Photo: Shutterstock/satephoto)

Tampa Electric has had to curtail operations at its Big Bend power station in Florida, and the utility blames the curtailment on “severe rail service shortages” and a reduction of coal deliveries. But CSX says the problem lies with the mine producing the coal, not with rail service.

In a May 9 letter to the Surface Transportation Board, Tampa Electric (TECO) says CSX (NASDAQ: CSX) has declined the utility’s requests to deliver coal from Foresight Energy’s Sugar Camp mine in Illinois to Big Bend. TECO says that CSX has delivered only one train instead of TECO’s original request for “several trains” in March and three trains in April. 

The utility also told STB that CSX has since refused requests for service until June “at the earliest” amid ongoing labor and congestion issues.

TECO’s letter comes as CSX and other U.S. Class I railroads have come under fire recently for significant delays and rail congestion. The letter from the utility was submitted to STB under the proceeding that the board opened in response to deteriorating rail service.

The STB proceeding includes testimony about rail service delays and congestion from coal producers in West Virginia and western U.S. states as well as testimony from two electric cooperatives.

“[CSX Transportation] has stated that it is focusing on minimum tonnage agreements and customers who, in CSXT’s view, are in danger of running out of coal and are more dependent on coal than TECO,” TECO said in its letter to the board. The letter was signed by Carlos Aldazabal, TECO vice president of energy supply. “We are troubled by CSXT’s reduction in service based on their opinion of customer need. One train out of ten over a three-month period is unacceptable and unsustainable.”

TECO may have to resort to the spot market for coal, which can fetch higher prices, the utility said. TECO utilizes coal as a means to keep fuel costs low, especially when natural gas prices are too high.

CSX attributes lower coal delivery volumes to reduced mine output

But in a letter to the board dated last Thursday, CSX said it was “surprised by TECO’s claims,” adding that it is committed to honoring its transportation guidelines with TECO even though the utility hasn’t been relying on CSX in recent years and has instead been focusing on securing natural gas supplies or coal transported via barge.

CSX says the real issue is intermittent supply coming from the Sugar Camp mine, which CSX says halted production from August 2021 to February 2022 because of a fire and has since resumed production but at 50% capacity. 

“Sugar Camp advised that CSX should expect to load an average of just under one unit train per day for domestic utilities. Yet since it resumed loading, Sugar Camp has demonstrated that it is unable to load trains in line with these expectations,” said the letter signed by Adam Longson, CSX vice president of energy sales and marketing. “CSX trains have encountered numerous instances where an arriving empty train is forced to wait extended durations because the mine is out of coal.”

CSX added that Sugar Camp is an essential mine for Southeastern utility companies, and the loss of production there has drained coal inventories in South Carolina, Georgia and Florida. 

“Please understand that CSX would like nothing more than to move additional coal to TECO, but as of now, that is not within our control. While TECO may bury the loading delays at Sugar Camp in a footnote, from our perspective Sugar Camp is at the heart of the difficulties TECO is facing,” CSX said. “Until Sugar Camp demonstrates an ability to fulfill the needs of the domestic utility market, we will not be able to tell if our current resources can match our customers’ needs. We will continue to stay in close coordination with both TECO and Sugar Camp and support them in every way we can through these challenging conditions.”

Foresight Energy did not respond to a request for comment, but local media reports refer to a fire at Sugar Camp’s two longwall mines in August 2021.

According to Foresight’s website, Sugar Camp Energy in southern Illinois consists of the MC#1 mine and the Viking mine. 

The MC#1 mine produced 7.2 million tons of Illinois Basin coal in 2020, down from 12.8 million in 2019, according to the U.S. Energy Information Administration (EIA). Coal from the mine went to utilities in Florida, Georgia, Kentucky and West Virginia. Big Bend received 105,413 tons of coal from the MC#1 in 2020 and 113,770 tons in 2021, according to EIA.

Production data for the MC#1 and Viking mines are combined in federal reports, according to Foresight.

Big Bend also received coal from the Prairie Eagle mine in Illinois: 216,848 tons in 2020 and 458,724 tons in 2021, according to EIA. Knight Hawk Coal runs the Prairie Eagle mine.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.