Coal

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Coal Transportation Rates to the Electric Power Sector

With Data through 2010  |  Release Date: November 16, 2012  |  Next Release Date: May 2014  |  Correction

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Methodology

EIA uses the confidential version of the STB Waybill data, which includes actual revenue for shipments that originate and terminate at specific locations. The STB Waybill data are a sample of all rail shipments. EIA's 2011 report describes the sampling procedure. EIA aggregates the confidential STB data to three different levels: national, coal-producing basin to state, and state to state. EIA applies STB withholding rules to the aggregated data to identify records that must be suppressed to protect business-sensitive data. Also, EIA adds additional location fields to the STB data, identifying the mine from which the coal originates, the power plant that receives the coal, and, in some cases, an intermediate delivery location where coal is terminated by the initial carrier but then transported to the ultimate customer under a new waybill. These latter multiple-leg shipments are excluded from the data used to calculate the reported STB transport rates. Otherwise, there is the possibility that the calculated rates to states such as Missouri and Illinois—which have key intermediate junction points—could be skewed.

Form EIA-923 data contains data fields to identify coal supplier down to mine name, mine state and mine county, coal user down to power plant name and state location, transport mode, total delivered cost, coal cost at the mine, and tons shipped. From data representing the full population, EIA eliminates all the records that either do not have any data for calculating transport rates or records with imputed transportation data. For each origin-destination pair, there can be multiple records within a year accounting for different mines, power plants and by-month data. EIA examines the data at the mine-power plant level to identify and eliminate outliers. EIA also applies withholding rules to the EIA-923 data to protect business-sensitive data.

The two data sets — STB and EIA — differ in terms of purpose, transport modes for which data are gathered, and the sample sizes of the respective surveys. The STB Waybill is a billing-year accounting mechanism which only surveys rail transport whereas the EIA surveys all modes transporting coal. As stated above, the STB data are a sample survey (http://www.eia.gov/coal/transportationrates/ ) whereas the EIA-923 data are intended to be a full population data set or census. EIA estimates transport cost as the difference between total delivered cost and commodity cost. In 2008, EIA revised Form EIA-923 to include commodity cost. When new elements appear in a data survey form, a typical outcome is that a few respondents provide no data because internal accounting may be difficult or missing, or respondents provide inconsistent or nonsensical data (which is not included in data reported by EIA).

For example some respondents in 2008 provided the same amounts when they reported free-on-board commodity cost and delivered cost. EIA implemented follow-up with respondents to clarify instructions and, consequently, the coverage of the EIA-923 survey has tended improve from the levels first experienced in 2008.

In the tables that accompany this report, EIA has calculated coverage rates for both STB and EIA data, according to the level of aggregation (national, basin to state, or state to state) for the data.

For example (see last two columns of Table 1), at a national level, in 2008, out of all coal shipments by rail to electric power plants reported on the EIA-923 survey 83 percent of the shipments (by tons) had acceptable free-on-board commodity and final delivered costs. By 2010, 90 percent of shipments (by tons) had acceptable cost data. The coverage rates for the EIA-923 data should improve as more problems are resolved in subsequent years. In comparison, the coverage rate of the STB data (aggregated to a national level) has remained around 33 to 36 percent for the period 2001-2009 (Table 1). Unit trains—at a 50% sampling rate—are the most densely sampled shipments in the STB data. As more coal is shipped on unit trains, the coverage rates for the STB data can increase but can never exceed 50 percent.

Under existing confidentiality policies, STB and EIA rates are withheld from publication when the number of respondents is so low that some respondents can back-calculate costs of other respondents. At lower levels of aggregation—for example state to state compared to basin to state—it is usually necessary to withhold more rates to assure data confidentiality. Therefore, because of the relatively high number of shipments included in each origin-destination pair of EIA-923 data, more EIA rates than STB rates normally can be published. This can be seen in a comparison of Tables 23 and 27, for example.

Even though there usually are fewer observations in the STB data set than in the EIA-923 data set for each origin-destination combination, there is a high degree of similarity between STB and EIA-923 average rates. At a national level, EIA-923 average rates are within about 2 percent of STB average rates in the two years—2008 and 2009—when they can be compared (see percent difference reported in Table 1). Differences are expected to be larger at the basin to state and state to state levels according to how the STB sampling procedure over- or under-samples various segments of the waybill population. Also, because EIA-923 data are not always a full census, biases can be introduced. Nevertheless, differences are modest for the most part (see percent differences reported in Tables 3 through 8 and Tables 19 through 22). It is also worth noting that, overall, there are about the same number of positive and negative differences between STB and EIA rates, indicating that there is no systematic bias in the differences, or, approximately, that the expected values of the differences between the STB and EIA average rates are zero. EIA plans to continue analysis of differences between these rates.

The EIA-923 survey collects data for all transport modes including railroad, barge, truck, Great Lake colliers, coal-slurry pipeline, tramways, and conveyor belt. Data confidentiality rules preclude the publication of EIA-923 rates for coal-slurry pipeline, tramway, and conveyor belt below the national level. In this report, EIA is providing average rate estimates for truck and barge at the national level (Table 2) and at the state to state level (Tables 15-18). Truck and barge transportation occurs mainly in states east of the Mississippi River. Consequently, truck and barge rates by basin to state do not add much additional information and were not calculated by EIA.

EIA calculated the $1 per ton adder for subbituminous coal compared to bituminous coal based on studies by the National Energy Technology Laboratory (NETL), which has provided data on cost differentials between power plants burning different coal types. Subbituminous power plants have an approximate factor of 1.4 versus a bituminous plant on equipment volumes to account for the requirements of handling larger volumes of coal to obtain the corresponding heat content. For example, larger capacity is needed for boilers, ducts, pollution control equipment, waste steam pipes and coal handling equipment and stockpiles. The factor 1.4 is the ratio of bituminous coal heat content (12,300 Btu/lb.) to subbituminous coal heat content (8,800 Btu/lb.). NETL optimizes the combination and size of equipment and arrives at a cost addition ranging from $0.60 to $1.20 per million Btu in 2010 dollars. EIA assessed a value of $1 per million Btu in this report in the market area section assessing PRB and CAPP market area competitiveness.

This $1 adder was only included in the Coal to gas coal switching: A look at competing coal basins section and is not included in any of the data tables or other parts of this report. EIA acknowledges that this analytic technique does not take into account factors specific to individual plants or other contractual or special considerations which are important in determining actual coal purchasing economics and choices. Rather, this analysis is intended to provide on-average cost information and demonstrate the significant shifts in regional coal market dynamics over the period.


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In this report:

Background

Trends, 2001 - 2010

Methodology

Tables:

Estimated transportation rates for coal delivered to electric power plants, U.S. averages:

  1.   by rail
  2.   by barge & truck

Estimated average rail transportation rates for coal originating in:

  1.   Northern App. Basin
  2.   Central App. Basin
  3.   Southern App. Basin
  4.   Illinois Basin
  5.   Powder River Basin
  6.   Unita Basin

Estimated rail transportation rates for coal, basin to State:

  1.   STB (nominal $/ton)
  2.   STB (real $/ton)
  3.   STB (nominal $/ton-mile)
  4.   STB (real $/ton-mile)
  5.   EIA (nominal $/ton)
  6.   EIA (real $/ton)

Estimated barge transportation rates for coal, state to state:

  1.   EIA (nominal $/ton)
  2.   EIA (real $/ton)

Estimated truck transportation rates for coal, state to state:

  1.   EIA (nominal $/ton)
  2.   EIA (real $/ton)

Estimated rail transportation rates for coal comparing EIA and STB:

  1.   state to state - 2008
  2.   state to state - 2009
  3.   basin to state - 2008
  4.   basin to state - 2009

Estimated rail transportation rates for coal, state to state:

  1.   STB (nominal $/ton)
  2.   STB (real $/ton)
  3.   STB (nominal $/ton-mile)
  4.   STB (real $/ton-mile)
  5.   EIA (nominal $/ton)
  6.   EIA (real $/ton)

Note: STB = U.S. Surface Transportation Board Carload Waybill Sample