Nation’s Largest Coal Producers Look to Merge that Supply Nearly 60% of Wisconsin Coal

The nation’s largest coal producers want to merge two Wyoming mines that supplied more than half the coal burned last year in Wisconsin power plants, raising questions about the potential impact on ratepayers.

Peabody and Arch Coal last week announced plans to form a joint venture that would control seven mines, including five of the most productive mines in the country. The companies said the move would allow them to cut costs in order to compete with natural gas and renewable energy sources.

The two mines, which share a 7-mile property line in the Powder River basin, last year produced more than 10.4 million tons of coal delivered to Wisconsin power plants, according to the U.S. Energy Information Administration (EIA). That’s more than 57% of the state’s total supply.

What the merger, which is subject to approval from the Federal Trade Commission, means for Wisconsin utilities and their ratepayers is uncertain.

Representatives of the largest coal-burning utilities said the companies are still evaluating the potential effects.

“At this point it is too soon to say what, if any, impact this will have,” said Brendan Conway, spokesman for We Energies, the state’s largest utility, which last year got more than two-thirds of its coal from the two mines.

Arch and Peabody said in a news release that the joint venture would result in cost savings of $120 million a year .

Whether those savings would be passed along to customers remains to be seen, said Brett Watson, a resource economist who studies the coal industry at the University of Alaska-Anchorage.