Colorado Springs utilities to pay twice as much for coal

From the Colorado Springs Independent:

Colorado Springs Utilities’ decade-old coal-hauling contracts expire next year, so it’s time to make a new deal. And the negotiations, which began recently, are sure to bring higher costs, says Utilities energy supply general manager Drew Rankin.

That’s because East Coast utilities have elbowed their way in at the same mines Colorado Springs buys from: Powder River Basin in Wyoming and mines in northwestern Colorado. Eastern utilities want the coal because it has a lower sulfur content and burns cleaner. That’s crucial as the government looks to force power generators to cut carbon dioxide pollution and to add expensive emissions control equipment.

The city projects that rail charges will increase by about a third by 2012, from around $10 per ton in 2008 to an estimated $15 per ton, or $30 million annually. The price of coal itself will go up even more, doubling from 2008 to 2012 to roughly $27 per ton, or $54 million a year, city forecasts show. The increases definitely will impact rates, although it’s too soon to estimate how significantly.

Small wonder, then, that coal companies’ shares are soaring.

In related news, see “Goldman Raises Iron Ore, Coking Coal Price Forecasts.”