Grand Island, NE-The Grand Island, Neb., City Council voted June 12 to contract with Western Fuels Association Inc. to handle its coal contract negotiations.
Grand Island Utilities burns about 350,000 tons of Powder River Basin coal per year at the Platte station. The utility's current supply agreement with Arch Coal Inc. expires at the end of 2012, and its coal transportation contract with Union Pacific Corp. runs through 2013.
The same team of staff members has handled Grand Island's coal purchases since 1987, but retirements have left Utilities Director Tim Luchsinger as the only city staff member with experience in coal contracts. According to Luchsinger's presentation to the City Council, "to obtain qualified assistance and allow new city staff time to gain experience in these transactions, utilities management requested a proposal from Western Fuels Association.
"The fuel management services would include soliciting coal that meets Platte requirements as part of their bulk solicitation for their other members, and providing a recommended purchase agreement meeting the procurement policies of the city," Luchsinger continued. "The final agreement would be a contract negotiated between the city and the coal supplier and presented for consideration by council. Upon approval of the coal supply contract, WFA would also manage scheduling of coal deliveries with plant staff, the coal supplier and the railroad."
Luchsinger said the city would be in a position to obtain more favorable pricing by being included in Western Fuels Association's large transactions. "They can assist us by going out for bids for their larger customers and including our tonnage in the package," he explained. "Based on pricing and quality, they could bring us the option to enter a contract with that supplier on those terms."
He said the contract with Western Fuels Association is for five years, and the resultant coal supply contract may be for one year or more than one year.
Photo of Platte Station