Coal Replaces Evaporating Hydroelectric Power : Record Year Expected as Drought Forces Utilities to Use Alternatives

Coal industry officials predicted Tuesday that the nation’s coal companies will have record production this year, as some utilities turn to coal-fired generators to replace hydroelectric power in this summer of drought and searing heat.

In a midyear production forecast, the National Coal Assn. said production of bituminous, anthracite and lignite coal should total 926 million tons in 1988, up 9 million tons from last year’s record.

The Washington-based group also said consumption of domestic and imported coal is expected to total 932 million tons, an increase of 15 million tons from last year’s record.

The association originally estimated that production and consumption this year would be at or below 1987 levels, but members of its economic committee said revisions in the forecast were necessary largely because of the weather.

“We’ve had one of the worst drought years ever, and the weather’s been much hotter than normal,” said David MacKenzie, director of strategic planning for Amax Coal Co. of Indianapolis. “It’s certainly picked up consumption and demand for coal over what it would have been.”

“With low water conditions in the Pacific Northwest, particularly, utilities that normally use hydroelectric power have had to turn to coal-fired generators. There’s also been increased use of air conditioning and that pushes up the demand for coal.”

John Tellmann of Mapco Coal Inc. in Tulsa, Okla., said the committee expects utilities to burn 7 million to 10 million tons more coal than they would if weather conditions were closer to normal.

“Most of the demand increase is going to be for Western coal because they supply the utilities out there that can’t use hydro,” Tellmann said.

“East of the Mississippi (River), we don’t expect a significant increase,” he said. “There is a potential for a little bit more, perhaps. But it’s sort of the consensus that it will be about the same as last year.”

In its forecast, the association projected a 2.9% increase in the gross national product this year and said a healthier-than-expected economy also played a role in changing its expectations.