Competition may bring 40 years of service to a close.
Peabody Coal Co.'s Seneca Mine -- the exclusive provider of coal to the Hayden Station power plant for much of 40 years -- is not running out of coal, but it may be running out of coal that the company can provide at prices competitive with other mines in the area, Peabody spokesperson Beth Sutton said.
Sutton said if Peabody cannot maintain a profit while continuing to run a safe and efficient mining operation, it would not be able to provide 100 percent of Hayden Station's coal needs.
"We do have sufficient reserves," Sutton said. "But we are facing increased market pressures, such as increased health-care and insurance costs. We value our relationship with the Hayden Station, but a number of factors could impact our operations with them in the future."
Although Seneca has a contract to provide all the power plant's coal through 2011, Seneca must confirm in April whether it will continue to provide 100 percent of Hayden Station's coal needs, beginning in 2006. Seneca could opt to provide a lower percentage of the plant's needs.
If Seneca chooses to provide less than 100 percent of Hayden Station's coal needs -- 1.8 million tons annually -- Xcel will use one of several proposed options to ship coal from other mines to the power plant. Several of the options have created controversy, including building a railroad or conveyor belt on ranchland across U.S. Highway 40, or hauling coal by truck on Routt County Road 27, possibly from Twentymile Coal Company.
Peabody could continue to provide 100 percent of the coal using mines other than Seneca. If Peabody is successful in its recent bid to purchase Twentymile Coal, it could provide all of Hayden Station's coal needs but would probably have to haul coal along C.R. 27 from Twentymile to the power plant.
"Until April, we will not know when or if we need a new coal provider or coal-hauling method," Hayden Station Director Frank Roitsch said.
The Seneca mine opened in 1964. It employs 75 workers and produces coal from 8,400 acres of privately owned, federal- and state-leased lands, extracting coal from the Wadge and Wolf Creek seams up to 100 feet below the earth's surface. The seams are about 12 to 14 feet thick under heavy rock and soil.
"Since the mine opened, it has been a reliable, low-cost source of coal for Hayden Station," Sutton said.
Mark Stutz of Xcel media relations said part of seeking coal-delivery alternatives is because Hayden Station needs a "backup plan."
"We just can't allow ourselves to get to the point where Seneca may not have enough coal to meet our needs without a backup plan," Stutz said. "It's not so much the question if there was enough coal there, but if it was economically viable to bring it out."