Could the Tennessee Valley Authority put Colorado coal mines out of business?
The coal train was one of the first things I noticed when I moved to Paonia, Colo., the hometown of High Country News. When it chugged through town, whistle blasting, my bedroom windows rattled like teeth in the cold. If I was on the phone, I would tell the person on the other line to hold on until it passed. I remember another recent transplant explaining her similar experience on our community Facebook page and asking the crowd if she would ever get used to the whistle blowing in the middle of the night. Yes, she was told, but just remember: that trainload of coal pays the bills for many people here in the valley.
Soon there may be fewer trains. One of our local coal mines (there are three in the valley) just laid off most of its nearly 300 miners after a fire and an underground roof collapse forced the company to abandon its longwall, a massive piece of equipment that can cost $50 million. Now, workers at another local mine are worried they could lose their jobs, too, if the Tennessee Valley Authority, the largest public power company in the country, doesn’t renew its coal contract, which expires at the end of the year.
TVA has been buying Colorado coal since the early 1990s, when the first President Bush amended the Clean Air Act to reduce sulfur dioxide emissions from power plants. To meet the new regulations, Eastern utilities like TVA, which formerly got a lot of its coal from the Southeast, began substituting with Western coal, which is generally less sulfuric.
But now, utilities around the country are trying to figure out whether it makes sense to continue using coal when natural gas is so cheap and when the U.S. Environmental Protection Agency is likely to regulate carbon dioxide emissions from existing power plants, making it more expensive to burn coal. For TVA, it seems like the answer is no: in 2011, the utility announced it would close 18 of its 59 coal-fired units as part of a court settlement for Clean Air Act violations. A few weeks ago, TVA added another eight units to that list.
“Coal in the 1970s was as much as 70 percent of our generation mix and we’re now at about 40 percent,” says TVA spokesman Duncan Mansfield. Under a new long-term plan for the utility, coal’s contribution will drop to 20 percent.
The Southeast, more than any other region in the country, has begun to shift away from coal, according to the federal Energy Information Administration. The reasons being: low gas prices, lots of efficient gas-fired generators, and, most importantly for Colorado, the high costs of importing all that low-sulfur Western coal.
“Coming out of the mountains is expensive,” says Bob Burnham, an independent Denver-based coal industry analyst. Mines in the Indiana Basin, which includes parts of Indiana, Kentucky and Illinois, are much closer to Southeastern power plants. Even Powder River Basin coal from Montana and Wyoming has an advantage over most Colorado mines: it doesn’t have to cross the Continental Divide.
As TVA cuts its coal consumption, it will cut especially deeply from its Colorado suppliers, says Mansfield. That’s especially bad news for Paonia, whose three local coal mines predominantly sell to TVA.
It’s a hard time for mine operators to shop for a new coal contract. “We’re in an over supply situation in the U.S.,” Burnham says. “The utilities know there’s somebody out there who can sell them the coal. The mining companies are scrambling to get their share of the business. And there’s no guarantee that they will get it.”
It’s an uncertain future not only for the miners here, but for all of us who benefit from the stores and services that those high-paying jobs support. The changes only underscore how much even isolated rural towns are impacted by macroeconomic forces and decisions made far away.
Emily Guerin is a correspondent at High Country News. She tweets @guerinemily.