Ongoing service issues with BNSF Railway Co. have resulted in a “coal supply crisis” for several generators in the Upper Midwest.

According to a document provided by the government relations staff of Dairyland Power Cooperative, the poor rail service may result in its coal-fired plant in Genoa, Wisconsin, running out of fuel during the upcoming winter heating season.

While winter may seem a long way off, the fuel supply crisis looms ominously on the horizon because the Genoa plant receives its fuel via Mississippi River barges. Those barges are loaded at a dock in southeast Iowa where BNSF delivers the coal in rail cars.

The problem arises because the Mississippi barge-shipping season is limited due to the river freezing during the winter. The Genoa plant must receive enough fuel during the season—roughly May through October—to last until the following spring when the river reopens.

Issues with BNSF began in the fall of 2013, but the problem has not been isolated to Dairyland facilities. On April 10, 2014, the Surface Transportation Board (STB) conducted a public hearing in Washington, D.C., to discuss the service problems that had been occurring across a significant portion of the nation’s rail network.

Dave McMillan, senior vice president of external affairs for ALLETE and executive vice president for Minnesota Power, spoke at the hearing on behalf of the Western Coal Traffic League (WCTL) and Minnesota Power. WCTL is a league comprised of shippers of coal mined in the western U. S. Its members transport about 140 million tons of coal annually.

McMillan said that problems included precariously low stockpiles, emergency trucking of coal, and reduced coal-fired generation. He noted that Minnesota Power’s stockpile levels dropped to as low as four days at its largest power plant earlier in 2014.

Rail Crunch

BNSF blames the crisis on a big jump in demand for its services—much of it for crude-by-rail—combined with bad weather last winter.

Robert Lease, vice president of design and performance for BNSF, spoke on behalf of the railroad at the STB hearing. He said that “grain surged, coal jumped, crude oil spiked, and velocity slowed down” in the fourth quarter of 2013.

“As we worked through our traffic surge from the fourth quarter, we were behind in terms of velocity, behind in locomotives and crews. Then a really, really tough winter took hold, and the outcomes got worse,” Lease said.

BNSF says that it is adding locomotives at record numbers and adding train crews at a pace that exceeds its plan. Track capacity takes the longest amount of time to increase, especially in the northern region where the construction season is only seven months long, but the company says that it is investing heavily.

“No railroad had spent $4 billion in capital until we did it last year in 2013.  Followed by a $5 billion capital program this year,” said Lease. “Our hiring plan now has been increased to 5,000 new employees this year. We’re purchasing over 500 locomotives, adding to the increase in our road fleet from last year, as well as acquiring additional rolling stock.”

Congestion Continues

But the BNSF actions do not seem to be helping. Xcel Energy reported that, like Dairyland, it also struggles to get the coal that it requires. On July 23, the company sent a letter to the STB to inform the board that rail service has been insufficient for its 2,400-MW Sherburne County Generating Plant’s needs.

According to Tom Imbler, vice president of commercial operations for Xcel Energy, the letter stressed the importance of the plant—the company’s largest, located near Becker, Minnesota—and asked the STB to include coal deliveries in additional reporting requirements that were implemented for grain and fertilizer shipments earlier this year. Although Xcel has limited the plant’s output to conserve coal at times this summer, mainly during off-peak hours, it is not currently limited.

But Dairyland’s Genoa plant still seems to be in the worst predicament. The company says BNSF will need to triple the normal pace of deliveries for the remainder of the shipping season in order to reduce the serious inventory shortage. With half of the barge shipping season over and Genoa’s coal supply less than half of what it should be, time is not on its side.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)