Despite coal stockpiles, long railroad strike could increase Coloradans' electric bills

Matt Whittaker

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A Union Pacific engine heads a weekly train from Grand Junction to Montrose.Chuckcars / Flickr

By Matt Whittaker / NewsBreak Denver

(Across Colorado) Colorado coal mine managers and coal-fired power plant operators are bracing for a potential national railroad strike that would disrupt fossil fuel shipments from western Colorado to utilities in the state.

At least two utilities that operate coal-fired power plants in Colorado say they have enough coal on hand to weather a strike. But a lengthy rail transport outage would likely raise coal and natural gas prices and hike consumer electric bills.

Rail companies operating in the United States and union workers are at loggerheads over pay and working conditions, and a strike is possible this month.

“The strike’s going to affect most coal produced in Colorado,” said Stan Dempsey Jr., president of the Colorado Mining Association. “It would affect movement of coal.”

Mine managers in Colorado have adopted a wait-and-see approach to the strike, he added.

Meanwhile, the Tri-State Generation and Transmission Association has a 30- to 50-day coal supply on hand at the plant it operates in Craig – “sufficient coal supply in place to weather any potential strike,” spokesman Mark Stutz said. 

Colorado Springs Utilities has a 111-day coal supply at its Ray Nixon Power Plant in Fountain and expects another delivery this week, spokesman Steve Berry said.

Investor-owned Xcel Energy, which operates three coal-fired plants in the state and has a stake in the Craig plant, didn’t respond to requests for comment. Black Hills Corp., the other investor-owned utility operating in Colorado, doesn’t operate coal-fired plants in the state.

Keeping the lights on if a strike happens

Nationally, railroads haul 70 percent of the coal used to produce more than 20 percent of America’s electricity, the Association of American Railroads said.

Union Pacific, one of the rail companies in negotiations with unions, transports about half of the coal used at Tri-State’s Craig plant from the Colowyo Mine, about 25 miles away. The rest of the power plant’s coal is delivered by truck from the Trapper Mine, which is located near the power plant and can provide additional short-term coal supplies in the event of a prolonged strike, Stutz said.

“With this in mind, we do not anticipate any increased use of natural gas generation or acquisition of additional purchased power, and we do not anticipate any impact to our members’ rates,” Stutz said.

Rising costs for Colorado Springs Utilities customers would only be a concern in the event of a lengthy strike, Berry said.

If that happened, the utility would consider purchasing power, running its natural gas-based generation more and focusing on conserving the coal it already has at the Ray Nixon plant.

“A prolonged railroad strike could dramatically drive up the cost of coal and natural gas on the already volatile domestic market, increase the cost for other energy-related materials that normally rely on rail-based delivery and force us to run natural gas generation at increased levels,” he said. “This scenario would be especially challenging for long-term rates as we head into colder weather.”

Mine stockpiles likely low

While coal-fired power plants typically keep 30 or more days of coal stockpiled, mines generally can only store a few days of output, the railroad association said.

The amount of coal that Colorado mines keep stockpiled depends on market conditions. This year the type of coal used for electricity generation is in high demand as utilities switch to coal-fired generation because of already high natural gas prices, Dempsey said.

High summer temperatures in the United States have led to increased natural gas demand to make electricity to power air conditioners. 

That’s on top of globally high natural gas prices after Russia’s invasion of Ukraine led to a natural gas crisis in Europe. 

Depending on the weather this winter, natural gas could remain in high demand as a source for home heating. 

“If coal doesn’t move after a certain point, and we’re going into winter, then you’ll see natural gas prices go up,” Dempsey said.

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

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