Duke Energy, based in Charlotte, N.C., reports that its 630-MW Edwardsport, Ind., integrated coal gasification, combined cycle plant has seen another major cost hike. In a filing with the Indiana Utility Regulatory Commission, Duke said the plant will now cost $2.35 billion, up from its prior estimate of $2 billion.
The plant is under construction next to an existing, elderly 160-MW coal-fired generating plant dating back to the 1940s.
In a press release, Duke (parent of Public Service of Indiana, the plant owner) blamed supply chain cost increases for the escalated price tag. Said Jim Turner, president of Duke’s franchised electric and gas division, “In North America the cost of building all types of power plants has risen substantially in the past year. We’re now in competition with developing nations such as China and India for materials, and we are seeing increased labor costs to build power plants.”
The IRUC gave Duke a green light to start building the plant last November, but the regulators will need to bless cost increases. Duke says the plant – the first new major coal-fired plant in the state in more than 20 years – should be in service in 2012.
The Duke plant will gasify local coal, burn the synthesis natural gas in two combustion turbines and generate additional power in a heat-recovery steam turbine. Duke says it can remove carbon dioxide during the gasification process, where it also removes sulfur and nitrogen oxides. But that’s not a requirement for the plant’s operation.
In Kansas, the state senate overturned Democratic Gov. Kathleen Sebelius’s veto of a two-unit, 1,400-MW coal fired plant in western Kansas at the existing Holcomb station. The project is owned by two public power generation and transmission utilities – Sunflower Electric Power Corp. and Tri-State Generation and Transmission Association. Both make power and send it to rural electric distribution cooperatives.
But the next day, May 1, the Kansas house was unable to overturn the governor’s veto, by a four-vote margin (80-45). While there are legislative maneuvers remaining, time is running out on the move to overcome the governor’s thumbs down on the coal-fired project.
Sebelius nixed the project because of assertions that CO2 emissions would harm the planet (but not necessarily Kansas). In overriding the governor’s veto, which supported a decision by her air regulators, the state senate adopted “trailer” provisions aimed at giving the governor political wiggle room. Those include a requirement that the executive branch “propose and submit to the legislature carbon dioxide air emissions requirements.” These, of course, are the equivalent of Soviet five-year-plan grain quotas: they sound good but have no practical meaning.
Finally, the weak dollar and high energy prices are producing a boom for coal miners in Appalachia, particularly workers in mines that produce metallurgical coal for steel making. The Associated Press in Charleston, W.Va., reports, “Even as a wave of job cuts afflict workers in the U.S., in coal country, mine operators are offering free health insurance, gas money, stock and bonuses to lure enough miners as coal fetches record prices.”
It’s a combination of booming demand for coal, with prices for utility-grade high-Btu eastern coal rising to $95/ton and $200/ton for met coal, and the impending retirement of baby-boom generation miners.
U.S. coal exports are soaring, say industry and government accounts. In 2007, according to the Energy Information Administration, U.S. coal exports totaled about 60 million tons, compared to about 50 million tons in 2006. Reuters reports that first quarter 2008 exports from Newport News and Norfolk, in Virginia, rose to 9.4 million tons, compared to 5.2 million tons for the same quarter in 2007.
The coal industry is projecting 2008 exports of some 80 million tons. That figure is approaching the triple-digit export figures of the early 1980s, when U.S. coal exports were also propelled by a very weak dollar. At the same time, domestic utility coal demand is rising steadily.
The result: a coal industry seeking workers at all skill levels, and willing to pay top dollar, including signing bonuses, multi-year contracts, free health benefits, and the like. Need a job? Here it is.
Surface mines generally recruit somewhat less-skilled workers. Most of the tasks in strip mines involve operating heavy equipment in a largely non-threatening, above-ground work environment. But the wages are soaring here too.
Underground miners must have greater skills and safety-consciousness, and they get paid more (in excess of $40/hour). Experience pays off for underground miners; new, rookie workers can reduce productivity and increase costs. It’s a labor market for miners at every level of experience. Underground miners are laughing at increased gasoline prices and buying new pickup trucks and SUVs.
The hiring practices among coal mining companies suggest that other energy developers will face the same strained labor market. They will have to go beyond simple hiring and compensation practices to recruit new workers. That could be particularly true when it comes to nuclear plants, where workers have to meet special qualifications and have superior skills, and are often represented by aggressive and savvy unions.