Call it Coal-orado

State sets production record as cost makes fuel attractive again

By Gargi Chakrabarty, Rocky Mountain News
April 6, 2004

Colorado is the fastest-growing of the nation's coal-producing states as the power industry increasingly switches to coal as the fuel of choice to generate electricity.

The state posted a whopping 16.9 percent jump in coal production from Jan. 1 through March 20, compared with a year ago.

It far surpassed Texas' 11 percent and Wyoming's 5.5 percent rates of growth. Montana ranked fourth at 4.4 percent, according to the Energy Information Administration.

In fact, Colorado's coal production touched a record 35.9 million tons in 2003, according to the Colorado Mining Association. That is 700,000 tons more than 2002's 35.2 million tons, which also was a record.

The CMA reports that coal use has tripled in the past 30 years and that coal is used to generate more than half of the nation's electricity supply.

"We have very good coal in Colorado," said Stuart Sanderson, president of the Colorado Mining Association. "It is very high in energy content and low in sulfur dioxide and mercury.

"Colorado coal is finding its way to the export markets. Also, power utilities are blending Colorado coal with other types of coal to meet the Clean Air Act requirements. Our coal is known as the compliance coal."

But Sanderson was quick to point out that Colorado, ranked seventh in terms of 2003 production, would not be able to challenge Wyoming's 370 million tons a year.

"Colorado already is a major player in the coal industry," Sanderson said. "The outlook is very positive. We have the prospects not only to increase to sixth place this year, but break into the top five in the near future."

The recent volatility in the price of natural gas - also used to generate electricity - has pushed power producers to plan more coal-fired plants. Coal accounts for more than 85 percent of the total electricity generated in Colorado.

Nationwide, 105 coal-fired power plants, including five in Colorado, are either in the planning stage or under construction, according to Platts, a division of McGraw-Hill Co.

For instance, Xcel Energy announced plans last month to build a new $1.3 billion coal-fired power plant. The last coal-fired plant in Colorado was built in 1984.

The 750-megawatt plant, located in Pueblo, would be completed by late 2009. One megawatt of power serves the electricity needs of roughly 1,000 homes.

"Coal is a very cost-competitive fuel," Xcel spokesman Steve Roalstad said. "With natural gas price volatility and its recent increases, coal becomes much more attractive.

"In addition, we believe that we need greater baseload generating capacity, and that is why we will ask for permission to build a coal-fired generator."

Baseload plants are designed to run continuously and typically generate more than 600 megawatt- hours of electricity.

Coal is typically used to fire baseload plants because of its stable and low price, compared with the more expensive natural gas.

The cost of electricity is 4 cents to 5 cents per kilowatt hour for new coal-fired plants compared with 5 cents to 6 cents per kilowatt hour for natural gas-fired plants.

Renewable power sources such as wind and solar, because of their intermittent nature, cannot be used to run baseload plants.

Xcel owns seven coal-fired power plants in the state that use coal from Wyoming and Colorado.

The Bush administration's energy policy, which stalled in the Senate last year and could be revived this year, offers $2 billion incentives for clean-coal technology.

The CMA reports that emissions from coal-fired power plants have declined in the past 30 years by 76 percent in sulfur dioxide and 58 percent in nitrogen oxide.

But the surge in coal demand from new power plants concerns the Wilderness Society, an environmental group.

"A big concern about all these new coal-fired power plants is the emission of carbon dioxide, a leading cause for global climate change," said Pete Morton, an economist with the Wilderness Society.

"Coal plants also emit sulphur dioxide, which creates acid rains, and nitrogen oxide, which creates ozone and smog," Morton said. "If we get more coal-fired plants in the Rocky West, then we will see brown clouds and increased pollution. That will reduce our ability to retain work force or attract tourists."



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