Duke rethinking options on use
of mountaintop coal

Other mining methods can cost more - but are less politically controversial.

Duke Energy made an unusual request of its coal suppliers last month: Quote the price of coal mined without blasting Appalachian mountaintops

With that, the nation's third-largest utility in power sales hinted that it might cut ties to the environmentally destructive and politically explosive practice.

Mountaintop-removal mining, or MTR, opens coal seams by removing the earth over them, and dumps the rock and dirt into valleys below. About 25 percent of coal in the central Appalachians, where most of North Carolina's fuel comes from, is mined that way.

Dozens of protesters were arrested outside its Charlotte headquarters in 2009 to protest its use of mountaintop coal. The Obama administration's Environmental Protection Agency signaled in April that it will take a harder line on streams buried under debris. Duke expects that to make it harder for mountaintop-removal mining to continue.

"We see mountaintop-removal coal as nonsustainable coal," said senior vice president Paul Newton, whose duties include overseeing fuel purchases.

Duke's request of suppliers, a first for the company, will reveal price differences between coal mined by mountaintop removal and non-MTR coal - and its availability. Coal from different types of mines is often blended together.

Some environmentalists suspect Duke is trying to buff its public image and has no real intention of banning mountaintop coal from its fuel mix.

"I definitely smell a rat," said Matt Wasson, program director at Appalachian Voices in Boone. "I have very strong suspicions that this is not about a sincere effort to protect mountaintops from coal mining."

The Energy Information Administration reported that surface-mined coal, which includes mountaintop-removal mining, delivered in North Carolina cost $80.84 a ton in 2008. Coal mined underground cost $78.29.

Industry officials say the lower cost of underground coal, against conventional wisdom, could reflect the blending of coal from different mine types and recent price volatility..

Duke lobbied against state legislation last year that would have prohibited N.C. utilities from buying mountaintop coal. The measure never got out of the House.

Its sponsor, N.C. Rep. Pricey Harrison, D-Greensboro, said Duke initially fought the bill, complaining that it would place the company at a competitive disadvantage.

"But I also heard from (Duke CEO) Jim Rogers and others in the company that they were starting to look at getting away from mountaintop-removal coal," Harrison said. "I was not surprised to see this (supplier request), but pleasantly pleased."

Definition an issue

Duke burned 14 million tons of coal in its eight Carolinas coal-fired power plants last year, a lower figure than usual as electricity sales slumped during the recession. It typically uses about 45million tons a year at its plants in the Carolinas, Ohio, Kentucky and Indiana.

Coal is typically processed at "prep plants" that blend coal from underground mines and a smaller number of surface mines. True mountaintop-removal mining, in which mountain contours aren't restored, is a small fraction of surface mining, the West Virginia Coal Association says.

Buying non-mountaintop-removal coal is "possible, but it depends on whose definition you use," said association vice president Jason Bostic. "The extremists and EPA have taken to calling all surface mining mountain-removal mining.

"If they follow the strict statutory definition of mountaintop-removal mining, they would be OK. If they follow the definition of the EPA and extremists, they would be hard-pressed."

Molly Diggins, state director of the Sierra Club, calls mountaintop mining a "barbaric practice" that needs to end.

"We're pleased with this as a first step," she said of Duke's action, "but we're looking forward to action and commitment in phasing out coal mined in that way."

Duke is reviewing its coal policies internally and testing coal from other regions to see how it performs in power plants designed to burn central Appalachian coal. But other obstacles could thwart Duke even if it wanted to stop using mountaintop coal.

Like most states, the Carolinas require utilities to produce the cheapest electricity possible. Their laws place the burden on utilities to prove that their fuel purchases are "prudently incurred." State regulators could veto more expensive coal.

"The standards by which we are judged don't appear to give us permission to pay a premium for fuels," said Paul Newton, the Duke executive.

Another of the nation's biggest utilities, Ohio-based American Electric Power, is already talking to regulators about its ability to consider more than price when buying coal, including whether it came from mountaintop-removal mines.

Big electricity users, who are keenly sensitive to rates, could try to block such a move by Duke

The Carolina Utility Customers Association, which represents industries, says it was told that Harrison's bill would have increased rates for Duke's industrial customers by about 8 percent.

Such a rate jump "would cause severe financial distress for many companies," said executive director Sharon Miller. "At this time of economic uncertainty, any material rate increase would put an additional strain on businesses and families who are struggling to stay afloat in this dire economy."

Health considerations

The EPA estimates that 2,000 miles of Appalachian streams have been buried by mountaintop mining. But that's only part of the practice's cost, says Bo Webb, an activist who lives below a 2,000-acre mining site in Naoma, W.Va.

"I find it repulsive that Duke Energy seems to think they can justify the use of mountaintop-removal coal because of a price savings," Webb said by-email.

"Real people that live in communities beneath mountaintop-removal sites in southern West Virginia are paying the heavy, hidden costs of mountain-removal coal with their health and lives. An energy company that purchases mountaintop-removal coal is taking advantage of a corrupt regulatory system that allows coal companies like Massey Energy to eliminate entire Appalachian Mountains, poison its water and kill its people."

Duke says it isn't passing judgment on coal producers or on what's right for Appalachia.

Our motives are, all things being equal, in not seeing mountaintop-removal mining. But we're not in a position to evaluate that," Newton said. "We are in position to determine whether non-mountaintop-removal coal is viable without harming Duke Energy customers."