The country's largest coal producers want to merge two Wyoming mines that delivered more than half of the coal burned in Wisconsin power plants last year. It raises questions about the potential impact on taxpayers.
Last week, Peabody and Arch Coal told plans to form a joint venture that would control seven mines, including five of the most productive mines in the country. Companies said the move would allow them to reduce the cost of competing with natural gas and renewable energy sources.
The foundation stone of the plan would combine the country's largest mine ̵
The two mines that share a 7-mile estate line in the Powder River Basin last year produced more than 10.4 million tons of coal delivered to Wisconsin power plants, according to the US Energy Information Administration ( EIA).
That's more than 57% of the state's total supply.
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What the merger, which is subject to approval by the Federal Trade Commission, means for Wisconsin utilities and their interest rate providers are uncertain.
Representatives of the largest coal combustion tools said companies are still evaluating the potential impacts.
"At this time it is too early to say what has any impact, it will have," says Brendan Conway, spokesman for We Energies, the state's greatest utility, which last year received more than two-thirds of its coal from the two mines.
In a press release, Arch and Peabody said the joint venture would cost $ 120 million a year.
If these savings were to be passed on to customers, it should still be seen, said Brett Watson, a resource economist studying the coal industry at the University of Alaska Anchorage.
"It's clear to me that they can't be in a worse bargaining position," he said.
But if prices are raised, it will probably come back by pushing utilities to burn more gas instead, says Rob Godby, director of the Center for Energy, Economics and Public Policy at the University of Wyoming.
"They would be foolish to hurt their primary customers," Godby said. "Especially when it's not clear how long the golden goose should be."
Scott Blankman, a former director of Alliant Energy, now managing the Energy and Air program of Clean Wisconsin, said utilities could see some of the cost savings, but there are risks for industrial consolidation.
"Having a concentration in a supplier actually increases the risk of supply disruption. You can get some benefits if you're lucky … but now you're totally tied to a vendor," Blankman said. "It's never a position that businesses will be in."
Hard times for coal
The coal industry has struggled over the last decade and despite White House efforts, the future doesn't look much brighter.
"They face a real upward battle," Watson said.
According to EIA data, US coal production fell from $ 1.17 billion. tonnes in 2008 to DKK 774 million. in 2017, since hydraulic fracking has made natural gas cheap and abundant, while wind and sun have become the cheapest sources of electricity production.
The credit rating company Moodys assesses the merger positively for the two companies, but is not expected to change the downward sales trend of the coal.
Moody's projects "modest" profits for the strongest mines and "stressed or even non-existent" margins for the weakest.
Coal production tends to track closely with electricity generation, the primary domestic market.
Money for Nothing: Consumer Groups, Utilities in Betting on Closed Plants  About 47,000 megawatts of coal fired plants – including a dozen Wisconsin generators – have retired since 2015 in the United States , according to EIA data, with essentially no new added system. More than half of the power plants expected to retire this year are coal fired.
Last year, natural gas surpassed the number 1 source of US electricity, and for the first time it was renewed coal in April.
Godby, studying the potential impact of the Obama Administration's Clean Power Plan (CPP), said declining gas and renewable prices had just as much impact.
"The market has gone It was so bad," he said.
Last week, the EPA exclaimed the economic interest rate rule, the Trump administration's compensation for the massive efforts to curb greenhouse gas emissions.
While far weaker than CPP, which was never implemented, ACE is not expected to stop the development of coal closure closures in Wisconsin.
Utilities say uniformly that they will stick to their CO2 reduction plans.
"We can't see any change in how we're doing business," says Scott Reigstad, spokesman for Alliant Energy, committed to reducing CO2 emissions by 80% over the next three decades.
The Long Game
Blankman said that the rule will not change the economy of the Midwestern network, calling for the lowest possible generators to first meet demand.
"They will still have headwinds because they become more expensive on the market than sun and wind," Blankman said. "I don't think in the long run that it basically changes."
And the coal industry's problems go beyond gas and renewable energy competition, Watson said. Mine operators face rising costs, as ball joints closest to the surface are depleted, and their innovations are not in line with the deeper reserves.
"These innovations were for a long time to win out" Watson said "About the millennium began the geology to win."