October 23, 2014 Read More →

Move to Close Loophole on U.S. Coal-Export Royalties; Prairie State Hires a New CEO; Wind-Energy Outlook

Reuters PRBREUTERS HAS AN IMPORTANT SCOOP THIS MORNING on U.S. government preparations to close an accounting loophole that helps coal companies make tens of million of dollars in profits off federal coal leases at the expense of taxpayers.

The article, by Patrick Rucker, chronicles a Reuters investigation into how coal companies “stood to pocket an additional $40 million on exports from Wyoming and Montana alone” in 2012. The piece explains how companies pay royalties on lower domestic prices, not on the higher prices they actually reap in foreign markets.

Reporting last year by Rucker prompted Sen. Ron Wyden of Oregon to call for an Interior Department review, and the Reuters article today says the U.S. Office of Natural Resources Revenue, part of Interior, “has drafted a plan to close the royalty loophole.”

Excerpts from the article:

– “Deborah Gibbs Tschudy, the agency’s deputy director, would not comment on specifics and only said the office wanted to collect on the true value of mining companies’ coal sales” “That transaction — the arm’s length sale — is the value we want.”

– “A nearly 50 percent slide in benchmark thermal coal prices in Asia from their 2011 levels has made the issue less acute, but government officials want to close the loophole before any market rebound that would reignite U.S. exports to Asia.”

– Before the market retreat coal exports were highly lucrative and minimizing royalty payments offered a handsome bonus. In 2011, the ton of coal valued at about $13 at home was fetching roughly 10 times that in China. Back then, less than 5 percent of coal from Cloud Peak Energy was shipped to Asia, but that made up nearly a fifth of its revenue, or about $290 million.”

Here’s the full article.

PRAIRIE STATE ENERGY COMPANY, THE ELECTRICITY PROVIDER THAT HAS SADDLED several U.S. municipalities with expensive, long-term financial commitments, has hired a new CEO. He is Donald Gaston, who, according to Prairie State, “most recently served as the Director of Fossil Generation for the Public Service Enterprise Group (PSEG), one of the 10 largest electric companies in the U.S. and New Jersey’s oldest and largest publicly owned utility.”

Here’s a blurb from the St. Louis Post-Dispatch published today via NJBiz.com on the announcement: “Gaston’s appointment ends a revolving door at the head of PSGC … The newspaper reported Thursday that the company has not had a permanent CEO since Peter DeQuattro resigned in May. At that point, Duncan Kincheloe, then the board chairman, took over as interim CEO. He was replaced as both chairman and interim CEO by (Marc) Gerken in September. The newspaper added that the 2-year-old, 1,600-megawatt coal plant and adjacent coal mine have been plagued by problems, including a delayed opening, higher-than-expected costs for its electricity, and power purchasers attempting to get out of their agreements as a result.”

Here’s the press release issued by Prairie State.

THE NEWS SITE THINKPROGRESS.ORG TODAY NOTES PUBLICATION OF A REPORT THAT SAYS wind-powered electricity will provide one-fifth of the world’s energy by 2030. The Global Wind Energy Outlook, according to the site, includes this snippet: “While wind power is already in 90 countries — with a total installed capacity of 318 gigawatts at the end of 2013 — growth has been flat for the last several years at about 40 gigawatts per year due to the economic crisis, low growth in wealthy countries, and policy instability. The report, put out by Greenpeace and the Global Wind Energy Council (GWEC), a trade organization, found that going forward this could change and per-year installations could rise to as much as 90 gigawatts.”

Here’s the full pdf of the report.

— Karl Cates
[email protected]
Twitter @ieefa_institute

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