Business has been better for Montana coal. Demand for Montana coal is softening for various reasons resulting in mine layoffs.

Mike Johnson, business agent for the International Union of Operating Engineers Local 400 said that at least 100 of the 400 Montana miners he represents have been laid off because of slumping coal demand. Johnson cited several reasons for the slump, including idle power plants in Colstrip and Billings.

“Colstrip One and Two are down. Corette is down,” Johnson said. “Right now, you've got big hydropower going. That’s always a big factor in the spring.”

Coal-fired generators like the ones operated by PPL Montana in Colstrip and Billings take a back seat to hydroelectric power every spring when the region’s reservoirs are full. But demand for Montana’s coal-fired energy has been soft for some time. A mild winter kept energy demands low last winter and June temperatures haven’t been hot enough to trigger air conditioners thus far.

“There is a very soft electricity market in the Northwest right now,” agreed David Hoffman, PPL Montana spokesman. “A lot of that is the time of year for hydro. There is also increasingly a lot of wind energy being brought online in the West. Wind skews the market.”

Wind generators receive a federal production tax credit, Hoffman said, which wind companies use to offer wind energy at a lower price.

“You actually have power trading at negative numbers. Wind will pay people to take wind energy,” Hoffman said.

In Washington and Oregon, wind farms have added 4,400 megawatts of intermittent generation into the regional power grid that Colstrip also feeds. That’s enough wind power to electrify 3.5 million homes, according to the Bonneville Power Administration, which operates the region’s transmission system.

There’s an incentive for regional power companies to opt for wind energy over coal. Both Washington and Oregon have renewable mandates requiring the power companies to add renewable energy to their portfolios. Four energy companies in Washington and Oregon with ownership stakes in Colstrip power are also subject to renewable mandates in those states.

There are also demand issues in the Midwest that affect Montana coal mines. Minnesota’s Sherburne County Generating Station, 45 miles west of the Twin Cities, is a major coal customer for Westmoreland Coal in Montana and Wyoming. Known as Sherco, the Xcel Energy power plant normally consumes 30,000 tons of coal daily. But, last November the plant's Unit 3 turbine and generator caught fire, shutting down more than a third of Sherco’s power production capability.

Sherco Unit 3 isn’t expected back online until the first quarter of 2013. The shutdown affected mining by Westmoreland Resources, Inc. at the Absaloka Mine near Hardin. The mine was specifically developed to supply coal to Sherco and a group of Midwestern utilities. In an April meeting with shareholders, Westmoreland CEO Keith Alessi said the Sherco 3 shutdown was a 2-million-ton loss on an annual basis. That’s about a quarter of Absaloka’s present capacity of about 7.5 million tons.

There are other Midwestern obstacles for Montana coal, said Bud Clinch of the Montana Coal Council. North of Cleveland, Ohio, coal plants serviced by Signal Peak Mine have been mothballed. And energy demand still hasn’t recovered from the recession.

“We’re suffering from the economy nationwide and demand is down in the major sectors, including the major industrial sectors,” Clinch said.

Coal power as a percentage of the United States’ energy is projected to slide to 40 percent by the end of this year, down from 50 percent four years ago. Natural gas, through the aggressive development of hydraulic fracturing technology, has become abundant and much cheaper than coal. And natural gas is a cleaner fuel, making it easier for major users to comply with clean-energy standards.

Not everyone expects natural gas to run coal out of business, however. Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, said that coal and natural gas have switched roles before. The fuels reversed roles when the price of natural gas rose. If natural gas use increases, both in power plants and in automobiles, the price will go up, Barkey said.

Politics and agriculture reporter for The Billings Gazette.

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(24) comments

cof

The unions need to realize that the same people that they are backing and voting for, the Democrats, are the same ones whose environmental policies are shutting down the coal industry and their jobs. I live near railroad track and watch trainloads of coal go past that are heading to the west coast to be shipped overseas. They pass right by the Highwood generating plant that had to go natural gas, which was more expensive, because the environmental policies of the government wouldn't let them use coal.

Jus Wundrin
Jus Wundrin

Well said. They need to realize that their union leadership needs to change.

Furhat

You must not have read the article. The reason for the slowdown in the coal industry is lack of demand. Your usual scapegoats of unions and gubmint regulations did not cause that lack of demand. Also, the article states that natural gas is cheaper than coal, not the opposite as you claim.

Also, the HGS moved to natural gas because the project developers could not find anyone who wanted to finance a coal fired power plant. Not making such a long term investment in coal is looking like a wise business decision at this point.

Also, I don't believe any coal is being shipped overseas from the US at this point. That is an industry wish, but still not a reality. And how can gubmint regulations be preventing the use of coal when you watch trainloads of coal going by your house continously?

Your comment is only 3 sentences long, but contains more than 3 inaccuracies. An amazing accomplishment, even for this board.

Skinwalker

It's not the unions or the environmental policies. Coal is a nasty source of energy. It could be burned with less impact than it is presently, but improving power plants to remove contaminants from the outputs is too expensive compared to natural gas which is now abundant in the U. S. Coal has been destroying the planet and killing our children since the 1840s during the industrial revolution in England. Everyone knows this. Burning coal contaminated the largest body of fresh water on the planet with mercury and now we cannot eat the fish from the Great Lakes. Try to hide your ignorance a bit better. The reduction in coal use is not about politics or government policy, it is about no one wanting to use this nasty source of energy unless it is absolutely the only choice.

Cowboy Fred
Cowboy Fred

SKinwacker: As per the norm, you have no clue, what you're talking about.

7john

MT, like WY, needs an energy policy. Absent a policy the defacto policy is boom, bust, crash. Thus is vulgarity of life without guiding policies. WY is in the midst of bust and will soon crash. The place to begin a policy is borrowing from Norway. No medieval rule of discovery-but phased development, never spend the principal on royalties, and never allow argument over spending the principal. MT needs to provide leadership on clean coal, gas farming, methanogenesis since the coal companies own WY it's captured by the past. Much of the best coal gas research comes from MT-yet the state and federal regulatory rules and land use plans lag by a decade or more. MT must pressure the feds to update these regulations immediately to determine split estate rules for gas farming, royalty rules, etc. Present (mis)use of realty rules for gas farming proposals is inappropriate, ignoring issues of owning or degrading the coal estate and royalties.

LastBestPlace

Actually Skinwalker, your details are wrong too. The assumption that coal energy (burning) is "doing in" the planet is false. Like EVERYTHING else we do in our daily lives, yes it contributes to greenhouse gases, but most are unaware that most coal fire plants are healthier than your Sierra Clubs (and the like) would lead you to believe. To assume that all the information given by these groups (who have a money making agenda of their own) is 100% accurate is sad.

The truth is that at this point in time, hydro and coal fired power plants are our best option for energy in this country. Its moronic to assume that we can just shut down and get rid of these plants in favor of wind energy. Wind energy is unpredictable, and is currently ridiculously subsidized by the government as a means of keeping those farms running. Not to mention that they provide little to no job market past the creation to the turbine itself.

Skinwalker

Please talk to the folks around the Great Lakes that cannot eat the fish due to mercury from coal about the environmental impact of coal. In addition, Charles Dickens disagrees with you. Remember the black fogs and black lung. Yeah, coal is great. I do not listen to the Sierra Club, it is almost 200 years of human experience that shows the environmental disaster of using coal. Try Google, it works.

By the way, more energy will not fix our problem, the population is increasing exponentially and our energy/food resources are not. If you really want to save the future, stop having more than two kids per family.

Abraham
Abraham

Funny, everyone is lamenting environmental issues and no where in the story did I read about environmental issues being the problem. Soft market for electricity, and resulting shut down of power plants as a result was the lament. Boy, you right wingers will jump at any chance to single out wind power, what a bunch of jerks.

napoleonsolo
napoleonsolo

@Tom Lutey - Your article also failed to mention that Senators Baucus and Tester knifed us coal miners in the back this past week by voting for the unwarranted EPA stringent regulations on power plant emissions (against Joint Resolution 37). Of course this doesn't play into the current problem of light demand for coal. But, a huge impact is looming on the horizon.

driver

Come on Furhat what are you saying? We exported four million tons of coal to China alone in 2010. The US is the fourth largest coal exporter in the world, most of the exported coal leaves from Northwest ports but New Orleans also ships a large amount.

ddiller

"It could be burned with less impact than it is presently, but improving power plants to remove contaminants from the outputs is too expensive compared to natural gas"

That is the same problem that wind energy has---it is too expensive compared to ANY other energy source, yet with enough government subsidies the US is forging ahead. Apply these subsidies to coal generation and you will create jobs AND cheap power.

billy banger

Federal coal subsidies are forms of financial assistance paid by federal taxpayers to the coal and power industry. Such subsidies include direct spending, tax breaks and exemptions, low-interest loans, loan guarantees, loan forgiveness, grants, lost government revenue such as discounted royalty fees to mine federal lands, and federally-subsidized external costs, such as health care expenses and environmental clean-up due to the negative effects of coal use. External costs of coal include the loss or degradation of valuable ecosystems and community health.

Just google coal subsudies and pages of breaks come up. All forms of energy get massive breaks.

hikertrash

Coal is the dirtiest form of energy. It is on the way out.

Cowboy Fred
Cowboy Fred

Umm, no it's not, chub wrangler. In fact, start up for the local PPL plant will be this week, turnaround is over. Enjoy your local low cost power.

billy banger

Thich is double in cost thanks to Republican deregulation of energy.

Cowboy Fred
Cowboy Fred

Riiiiiiiiiiiiight, keep hitting that pipe, billi.

DrGonzo
DrGonzo

I blame Obama and those pesky drones!

Regular Guy

We need jobs in clean renewables, that will take us into a positive future. Fossil fuels will be the death of mankind. We need to stop subsidizing fossil fuels. They get federal lands for pennies on the dollar, and don't have to take any responsibility for the billions we spend on health care costs due to the pollution created using fossil fuels, or for the billions that climate change has and will cost us. What, no climate change. Who told you that, the Easter bunny?

Cowboy Fred
Cowboy Fred

Tin foil hat alert!

Reich Wing Conservative
Reich Wing Conservative

How is China going to keep expanding it's military if we don't ship it more coal to power it's armaments industry?

BillingsCapitolofNewOldWest

So northern plains no resource council claiming endless trains through town is an exaggeration at the least.

Northern plains. State DEQ Ans state DNRC are all obsolete leftovers from colstrip days. Let's close and sunset these bitter failed obsolete organizations.

Save millions in state wages and nprc wasted dues.

billy banger

What we should git rid of is the obsolete Chamber of Commerse which is a mouthpiece of industry and does not care about the health and lives of anyone living in natural resource states.

End Daze

It is interesting how Lutey can write this entire article without even mentioning the wratcheting up of EPA regs and Obama's vow to bankrupt the industry. Having heard that how quickly would anyone run out and invest in new coal or even in the maintenance of coal plants? But I'm sure the points made here are accurate. Electricity is cheap now because of no demand, because of other anti-business stances by Obama. That it boomerangs to hit union members is just deserts. Wind energy doesn't cost less because it is subsidized, it just gets paid for through a different route so idiots can be fooled. Anyone sincerely concerned about the environment should know things cost more because they consume more energy to produce -- hence wind is less green than anything that (truly) costs less. If people weren't producing with fossil fuels they couldn't afford taxes for wind. How's that for a sustainable policy? Keep voting for Obama, we will be burning dry manure.

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