IDACORP Competition
Now Viewing IDACORP's competition in: Coal Mining
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the company's major customers? - Electric utilities use about 85 percent of coal production. Coal’s share of electricity generation is projected to decline, despite overall energy demand growth.
Does the company hold long-term contracts? - Some coal mining companies sell a majority of their coal on spot markets. Older long-term (20- to 25-year) contracts are often replaced with short-term contracts for two to three year terms. Such contracts specify quantities and quality, but prices are essentially set by the current market.
How many customers does the company have? - Smaller mines may sell to just one large customer.
Who else supplies the company's major customers? -
How is coal transported to customers? - Rail requires special loading silos. Nearby customers may be serviced by truck, conveyor belt, or slurry pipeline.
How do customers dispose of the fly ash? - Sometimes coal producers will take the fly ash back and put it in mined-out areas.
Competitive Landscape
Demand comes mainly from generators of electricity. Profitability depends on efficient operations, as the product is a commodity sold on the basis of price. Small companies can compete if they hold long-term contracts or if they supply local customers. Big companies have large economies of scale in production and distribution. The industry is capital-intensive and highly automated: average annual revenue per employee is almost $300,000.
Business Challenges
CRITICAL ISSUES
Demand Closely Tied to Electricity Generation - Demand for coal depends on demand for electricity, which depends on the health of the US economy. For example, during much of the 1990s, US electricity generation grew at an annual rate of 2 percent, but dropped 20 percent during the last recession. Many new electric plants are built to use natural gas instead of coal.
Prices Linked to Alternative Energy Costs - Coal prices are linked to prices for alternative energy sources, including oil and natural gas. Coal prices are generally more stable than other prices, but can change 10 percent in a year. To be competitive, coal must be priced less than natural gas, which burns more cleanly.
Industries Where IDACORP Competes
- Energy & Utilities
- Electric Utilities(primary)
- Aerospace & Defense
- Metals & Mining
- Coal Mining & Processing
- Telecommunications Services
