Utilities scramble as flooding delays coal supply

Union Pacific Corp., the largest U.S. freight railroad, said Tuesday the floods' effects will reduce its quarterly earnings and rail industry stock prices were battered on Wall Street.

Power producers say the disruptions aren't yet causing shortages of coal supplies because they maintain stockpiles in case of such disruptions. American Electric Power Co. Inc., the nation's largest power producer, has "weeks" of coal reserves on hand, spokeswoman Melissa McHenry said.

Most electric utilities also purchase coal through long-term contracts at prices set well before the floods hit. That will limit the floods' impact on the prices paid by utilities, analysts said.

Meanwhile, several major railroads have either closed lines or are reporting delays of up to three days on shipments of all types of goods. Union Pacific spokesman Donna Kush said three of the six lines knocked out by floodwaters on Friday are still out of service.

The Omaha, Neb.-based company also said "network outages and disruptions" will reduce its second-quarter earnings by about 5 cents per share. That will put Union Pacific's profit towards the lower end of its prior estimates between 90 cents and 98 cents per share, according to a regulatory filing.

While other goods remain on hold, the railroad is pushing through carloads of coal because it's needed to maintain the nation's power supplies. Energy-related products, including coal and petroleum coke--derived from oil products and used as fuel--make up 20 percent of Union Pacific's total shipments.

Spokesmen for other major North American rails--including Burlington Northern Santa Fe Corp., Canadian Pacific Railway Ltd. and Norfolk Southern Corp.--said they aren't prioritizing any commodity shipments despite delays that remain across the board.

The delays could boost coal prices, which have more than doubled since the beginning of the year, analysts said.

"It's helping to tighten an already tight market," said Jeremy Sussman, an analyst at investment bank Natixis Bleichroeder Inc.