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Issue link: https://coal.epubxp.com/i/130908
news continued have finished restoring their abandoned coal mines, saving $327 million over 10 years. Bear Run Ships Coal to Edwardsport IGCC Peabody Energy's Bear Run surface mine in southern Indiana, the largest surface operation in the eastern United States, was shipping coal this spring to Duke Energy Indiana's 618-megawatt Edwardsport integrated gasification combined cycle power plant in neighboring Knox County. Edwardsport, billed as the largest IGCC facility in the country, is expected to begin commercial operations late this year. Initially targeted to start generating electricity commercially more than a year ago, the nearly $3.5 billion base-load plant's in-service date has been pushed back a couple of times, mainly for additional testing and technical reasons. Duke, a subsidiary of Charlotte, N.C.-based Duke Energy, said it is confident Edwardsport will generate electricity as planned once the plant is cleared for commercial take-off this fall. A Duke official in April declined to say how much coal the plant is purchasing from Peabody, although he said Edwardsport is expected to need up to 1.9 million tons of coal annually. For now, Peabody is sending four coal trains a month from Bear Run to the power plant, although that number is expected to increase once the plant is operating commercially. Bear Run began production in May 2010 after Peabody spent approximately $400 million to develop the mine in Sullivan County. Since initial startup, the mine has ramped up steadily. Peabody sold 7.7 million tons of Bear Run coal in 2012 and said the mine has the capacity to turn out about 8 million tons a year. Bear Run produces coal from the Indiana Nos. 5, 5A, 6 and 7 seams. The coal is hauled from the pit by truck to the 1,600 tph prep plant for crushing, processing and blending before it is transported by train and truck to utility customers, including Duke. The mine produces high-sulfur steam coal, with the sulfur content ranging from 3 to 5 lb. According to Peabody, Bear Run has about 200 million tons of reserves. The mine employs 550 people and uses a combination of draglines, trucks and shovel, and dozers to uncover the coal. Edwardsport originally was approved by the Indiana Utility Regulatory Commission in late 2007 at an estimated cost of $1.95 billion. Because of cost-overruns, the final cost is projected to Pay for Coal CEOs Reflect the Market Average compensation for CEOs of the major public coal companies was roughly flat in 2012 at nearly $3.9 million, according to an SNL Energy analysis of proxy and annual report data filed by 12 coal producers and coallandholding companies. Median pay, however, rose 20%, to $2.3 million from approximately $1.9 million in 2011. Share price values for the 12 analyzed companies plummeted an average of 30% during 2012 as global coal markets continued to weaken, new environmental regulations impacted coal-burning power plants and the price of substitute fuel natural gas nose-dived. Stock price appreciation is among the factors companies typically link to executive compensation. Coal companies also typically consider the company's safety record during the year and personal performance of a given executive in setting pay targets. Among the 12 companies studied, half compensated their CEOs more in 2012 than in 2011. Hallador Energy CEO Victor Stabio received the largest increase in compensation as the company bought out his stock options in 2012 for more than $1.4 million in cash. CONSOL Energy Chairman and CEO J. Brett Harvey remained the highest-paid coal company executive in 2012. Harvey has been CEO of the coal and gas producing company since 1998. His total compensation in 2012 slipped to $14.3 million from $14.5 million in 2011. The bulk of his pay beyond his $1 million salary was $10.3 million in stock awards. He also received $2.8 million in non-equity incentive pay, which included cash incentives, according to CONSOL's proxy. CONSOL said its compensation plan is "designed to attract, motivate and retain key executives who will promote the short- and long-term growth of the corporation 12 www.coalage.com and create sustained shareholder value." In its proxy, the company highlights its record safety performance in 2012 and its "exceptional financial performance in very challenging markets for coal and natural gas in 2012." It said that compared to its peers, CONSOL's total return to shareholders was 29% better on a one-year basis. Harvey's current employment agreement expires June 3 and is automatically extended for additional oneyear terms thereafter. Peabody Energy Chairman and CEO Gregory Boyce was the second-highest-compensated coal executive, receiving nearly $9.5 million in 2012, down 7% from the $10.2 million he was paid in 2011. In its proxy, Peabody said its compensation philosophy involves pay-for-performance, alignment with shareholders through stock ownership and competitive compensation opportunities. Executives are paid contingent upon meeting certain goals for total shareholder return, earnings and safety and individual goals. For 2012, Peabody said executive officers achieved above-target annual cash incentive payouts, but below-target performance unit payouts. The bulk of Boyce's 2012 compensation was in stock and option awards. Those taking pay cuts in 2012 included Walter Energy CEO Walter Scheller, Natural Resource Partners LP Chairman and CEO Corbin Robertson Jr. and James River Coal Co. Chairman and CEO Peter Socha. Scheller was appointed Walter's CEO in September 2011 and was awarded a large equity grant in connection with his promotion. The SNL Energy analysis did not include compensation paid to Arch Coal President and CEO John Eaves because he was appointed to the CEO position in April 2012. According to the company's proxy, Eaves received nearly $4 million in compensation in 2012, up from about $3.9 million the year before when he was COO. May 2013