The EIA, which released data through to the end of November, said that stockpiles during that final month were above the levels of 2011 as well as the five-year average for an 11th consecutive month.
“Coal stockpiles typically decline during summer and winter as power plants burn through stocks to meet peak electricity demand for heating and cooling, respectively,” the agency said.
“Historically low natural gas prices contributed to reduced coal consumption at electric power plants during the spring and summer of 2012, while a warmer-than-normal winter 2011-2012 decreased the overall heating load in the winter.”
The EIA noted that, because a majority of power plant coal is purchased via long-term contracts, utilities rarely are able to defer their purchase, which subsequently leads to higher and higher coal stockpiles until a time when increased use can draw down the inventory.
Another factor examined by the agency is days of burn, of how many days a stockpile of coal can last based on consumption trends – so provide a forward-looking estimate of a plant’s coal supply.
Officials said the days of burn during 2012 were above the levels seen since 2008, reflecting the combined effect of ample stockpiles and lower utilization rates for coal-fired generators.
“Electric utilities often try to maintain a 60-day supply of coal on hand to avoid tying up operating capital in fuel stocks,” the EIA said.
“Because long-term contracts often have penalties associated with deferring shipments of coal, power plants are faced with few options other than continuing to accept deliveries.”
The move then has a ripple effect, as utilities can choose to lower future purchases as long-term coal contracts expire if they are left with higher inventory levels.
