Luminant to shut lignite mines supporting Monticello plant in April

The Luminant Mining unit of Energy Future Holdings recently sent out layoff notices to workers at its Winfield and Thermo lignite mines saying that operations there will be shut in April.

These mines supply lignite to the nearby, 1,880-MW Monticello plant, which for the past few years has burned a blend of higher-Btu Powder River Basin coal brought in by rail and the locally-mined lignite. The plan now is to burn only PRB coal in the plant. Energy Future Holdings had originally announced this plan in late 2014. Mine employees began getting 60-day layoff notices on Feb. 12 under the federal Worker Adjustment and Retraining Notification Act (WARN).

Luminant spokesman Brad Watson told Generation Hub on Feb. 16 that active mining will cease in April at Thermo, while at Winfield, where active mining has been shut down for some time, shipments out of mine stockpile will cease at that point. Both mines will go through several years of reclamation before all employees are let go. Watson emphasized that this decision is purely for business reasons based on fuel costs and the heavy capital investment needed to continue with the lignite mining, and not due to the ongoing bankruptcy case for Energy Future Holdings or particular environmental constraints.

Energy Future’s Luminant subsidiary, in terms of lignite/coal fueled generation fleet capacity, has a total of 8,017 MW at the Big Brown (two units), Monticello (three units), Martin Lake (three units), Oak Grove (two units) and Sandow (two units) sites. The company said in its March 2015 annual Form 10-K report: “Luminant meets all of its fuel requirements at its Oak Grove and Sandow generation facilities with lignite that it mines. Luminant meets its fuel requirements for its Big Brown, Monticello and Martin Lake generation units by blending lignite it mines with coal purchased from multiple suppliers under contracts of various lengths and transported from the Powder River Basin to Luminant’s generation plants by railcar. In 2014, approximately 56% of the fuel used at the Big Brown, Monticello and Martin Lake generation facilities and 73% of the fuel used at all of Luminant’s lignite/coal fueled generation facilities was supplied from surface minable lignite reserves dedicated to our generation plants, which are located adjacent to the reserves.”

The Form 10-K added: “As a result of projected mining development costs, current economic forecasts and regulatory uncertainty, in 2014, Luminant decided to transition the fuel plans at its Big Brown and Monticello generation facilities to be fully fueled with coal from the Powder River Basin. As a result, it plans to discontinue lignite mining operations at these sites once mining and reclamation of current mine sites is complete. Lignite mining and the majority of reclamation activities at these facilities is expected to be completed by the end of 2020 unless economic forecasts and increased regulatory certainty justify additional mine development.”

Watson said Feb. 16 that at Big Brown, the Turlington mine is expected to run out of lignite in the current mine area around 2018, at which point the mine will be shut and the Big Brown plant will be transitioned to all PRB coal. Big Brown has a capacity of about 1,150 MW.

U.S. Energy Information Administration data shows that the only PRB supplier last year for both Monticello and Big Brown was the Rawhide mine in Wyoming of Peabody Energy (NYSE: BTU), with the contract business for both plants to run until December 2015.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.