Coal utilization cost model for fuel procurement

Typically, as long as the coal quality is within the specified range, electric utilities have used delivered cost of fuel per million Btu as the primary criteria for qualified coals when making coal-procurement decisions. Such an approach may not fully address the total cost of using different quality coals at a given plant. A practical and easy-to-build model is described for estimating plant-specific utilization costs for coals of different qualities. Examples are included to illustrate the modeling results for plants operated by two utilities. While the model has certain limitations, it does represent an improved method for evaluating coal bids, and, consequently, reducing generation costs.