Coal Age

AUG 2016

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August 2016 www.coalage.com 5 news continued White House report has "prejudiced" the outcome of the DOI's evaluation of the program. That influence is a violation of the Na- tional Environmental Policy Act (NEPA), it said, because by law the review "shall serve as the means of assessing the environmen- tal impact of proposed agency actions," not justify decisions that have already been made. "The Council of Economic Advisers' report has effectively turned the BLM review of the federal coal program into a pre- baked cake," the senators said, noting that the council is an arm of the Executive Office of the President and that its chairman is President Barack Obama's chief economist and plays a significant role in administration policy. "Its report shows that the White House has already decided that the federal coal program does not provide a fair return to the public or adequately account for externalities and to increase coal royalty payments," it added. The senators are now calling on Jewell personally to suspend the development of the PEIS for the remainder of the administra- tion to ensure its findings are not simply justifying those premade decisions. "A failure to do so will only make the PEIS and decisions pur- portedly based on it vulnerable to legal challenges," wrote the senators. CONSOL Energy Pays to Exit CAPP CONSOL Energy will pay Booth Energy a total of $44 million to take over its Miller Creek mining complex and Fola Mining complex subsidiaries in West Virginia. The Miller Creek com- plex has an active surface mining operation and prep plant, which produced 2.1 million tons in 2015, according to the Mine Safety and Health Administration (MSHA), and two un- derground mines, which are listed as temporarily idle. The Fola Mining complex is a closed surface mining operation with two idled processing facilities. The transaction consists of $27 million cash at closing, of which a portion will be held in escrow for purposes of obtaining the surety bonds required for the permits to transfer, and an addi- tional $17 million in installments over the next four years. Booth Energy will assume the Miller Creek and Fola mine closing and reclamation liabilities, which are estimated by CONSOL Energy w o r l d n e w s Ratepayers Will Pay Billions for Alberta's Climate Plan The Alberta government will try to challenge a regulation it said will saddle The Alberta government will try to challenge a regulation it said will saddle The Alberta government will try to challenge a regulation it said will saddle consumers with billions of dollars in losses from coal-fired power agree- ments, according to The Canadian Press. The regulation, which passed in 2000 protecting power companies by allowing them to hand back agree- ments to buy electricity from coal-fired plants if actions by the govern- ment make them less profitable. The government estimates these power purchasing arrangements (PPAs) could cost consumers up to $2 billion by 2020. Editor's note: As part of Alberta's Climate Leadership Plan, developed Editor's note: As part of Alberta's Climate Leadership Plan, developed Editor's note: As part of Alberta's Climate Leadership Plan, developed by a Calgary-based climate change panel and Shannon Phillips, who by a Calgary-based climate change panel and Shannon Phillips, who was elected to the Legislative Assembly of Alberta in 2015 and named was elected to the Legislative Assembly of Alberta in 2015 and named the minister responsible for the Climate Change Office, the province has the minister responsible for the Climate Change Office, the province has levied a carbon tax that would be implemented in two steps, a $20/ton economy-wide tax in January 2017, escalating to $30/ton in January 2018. economy-wide tax in January 2017, escalating to $30/ton in January 2018. economy-wide tax in January 2017, escalating to $30/ton in January 2018. Alberta's economy is based heavily on oil, oil sands and coal. Alberta's economy is based heavily on oil, oil sands and coal. Enmax, which provides electricity throughout Alberta, has used the Enmax, which provides electricity throughout Alberta, has used the regulation to terminate its PPA. Earlier this year, Enmax said the govern- ment's decision to charge companies a higher tax on CO 2 emissions made the agreement unprofitable. Other companies that have served notice and the agreement unprofitable. Other companies that have served notice and said they intend to terminate such arrangements, include TransCanada Corp., Capital Power PPA Management and the ASTC Power Partnership. Corp., Capital Power PPA Management and the ASTC Power Partnership. "These legal agreements with the government have been in place and relied upon for 16 years, and were intended to be respected for a 20-year period by an industry that has invested billions of dollars in Alberta during period by an industry that has invested billions of dollars in Alberta during period by an industry that has invested billions of dollars in Alberta during this time," Enmax said in a statement. "We are very disappointed that the this time," Enmax said in a statement. "We are very disappointed that the government is retroactively challenging fundamental aspects that have been in place in these agreements since their inception." "We will exercise every legal avenue at our disposal to ensure that the "We will exercise every legal avenue at our disposal to ensure that the government of Alberta honors the terms of the PPAs," said Capital Power government of Alberta honors the terms of the PPAs," said Capital Power President and CEO Brian Vaasjo. "We believe the legal claim is without merit, and we will look to the courts to ensure that the government of Al- merit, and we will look to the courts to ensure that the government of Al- berta cannot retroactively amend an arrangement for which Albertan com- berta cannot retroactively amend an arrangement for which Albertan com- berta cannot retroactively amend an arrangement for which Albertan com- panies paid and upon which they have been relying in good faith for 16 years." Capital Power also questioned some of the government's assertions years." Capital Power also questioned some of the government's assertions as far as costs. Spokesman Mark Cooper said TransCanada has always operated in a fully open and transparent manner and will defend its right to terminate the arrangements. "We properly exercised our termination rights under provisions in the PPAs that were clear 16 years ago and that remain clear today," he said in a statement. "The government of Alberta through its reg- today," he said in a statement. "The government of Alberta through its reg- ulator the AUB clarified the intent of these provisions for all parties during ulator the AUB clarified the intent of these provisions for all parties during a fully public process back in 2000. We relied on the termination provisions in the PPAs as fundamental to the commercial decision to participate in in the PPAs as fundamental to the commercial decision to participate in the PPA auction and would not have participated without them." the PPA auction and would not have participated without them." In March, TransCanada and Capital Power both cited the increasing costs of CO 2 emissions when serving notice of their intention to terminate emissions when serving notice of their intention to terminate their agreements. The court action is to be heard in November. their agreements. The court action is to be heard in November. Coal Prices in Asia Move Higher Thermal coal prices in Asia may jump as much as 50% if rainfall caused by La Niña is heavier than expected, further tightening the market as China by La Niña is heavier than expected, further tightening the market as China cuts production, the South China Post reported, citing a Citigroup study. cuts production, the South China Post reported, citing a Citigroup study. Coal prices at the Australian port of Newcastle, an Asian benchmark, may Coal prices at the Australian port of Newcastle, an Asian benchmark, may increase to $90 per metric ton if La Niña rainfall hinders Australian and Indonesian output. China's steep production cuts are simultaneously rais- ing demand for seaborne coal. Prices have already climbed 19% so far this year to about $60 per metric ton, according to globalCOAL. Citigroup analysts are now reportedly bullish on short-term thermal coal prices. analysts are now reportedly bullish on short-term thermal coal prices. analysts are now reportedly bullish on short-term thermal coal prices. Continued on p. 6... top 10 coal-producing states (in Thousand Short Tons) Week Ending 7/30/16) YTD '16 YTD '15 % Change Wyoming 157,096 215,660 -27.2 West Virginia 41,540 57,968 -28.3 Kentucky 25,358 37,541 -32.5 Illinois 24,698 34,536 -28.5 Pennsylvania 22,580 30,244 -25.3 Texas 18,645 18,060 3.2 Montana 17,511 24,326 -28.0 Indiana 15,573 20,882 -25.4 North Dakota 15,045 16,616 -9.5 New Mexico 9,791 10,569 -7.4 U.S. Total 389,886 525,220 -25.8

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