WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY. DO NOT QUOTE OR CITE AS 

AEO2017 MODELING ASSUMPTIONS AND NOTE INPUTS ARE SUBJECT TO CHANGE.

1

September 7, 2016

MEMORANDUM 

TO: Dr. Ian Mead

Assistant Administrator for Energy Analysis

Jim Diefenderfer

Director, Office of Electricity, Coal, Nuclear, and Renewables Analysis

FROM: Coal and Uranium Analysis Team

SUBJECT: Notes from the AEO2017 1st Coal Working Group held on August 31, 2016

Attendees (62)

*Indicates participation via WebEx.

In an effort to solicit feedback each year, the Coal and Uranium Analysis Team (CUAT) invites

stakeholders to participate in coal working group meetings discussing EIA’s coal modeling methodology 

as well as a general discussion of issues facing coal supply and use. On August 31, Greg Adams, CUAT 

Name Affiliation Name Affiliation

Greg Adams EIA Augustine Kwon EIA

*Jose Alfaro Alpha Natural Resources *Dave LewandowskiClean Energy

*Jose Benitez National Energy Technology Laboratory *Carl Lundgren Department of Labor

*Andy Blumenfeld Arch Coal *Greg Marmon Wood Mackenzie

*Mike Caravaggio Electric Power Research Institute *Emily Medine Energy Ventures Analysis

*Ivan Clark Leidos *Bill Meroney Environmental Protection Agency

*Leslie Coleman National Mining Association *Greg Moxness Department of Labor

John Dean JD Energy, Inc. *Chris Nichols National Energy Technology Laboratory

Carol Dean JD Energy, Inc. *Ron Oster Peabody Energy

Jim Diefenderfer EIA Brian Park EIA

*Dana Echter Excel Energy *Jamie Peters U.S. Geological Survey

*Neva Espinoza Electric Power Research Institute *Paul Pierce U.S. Geological Survey

*Carolyn Evans Norfolk Southern *Jay Ratafia-Brown Leidos

*Jerry Eyster General Electric *Nathan Ratledge Resources for the Future

*Brian Fisher Environmental Protection Agency *Rick Roberts Electric Power Research Institute

*John Fix Leidos *Joshua Rockwell Department of Labor

*Mark Gehlhar Department of Labor David Rosner Department of Energy

*Stephen J. Gigliotti Department of Labor *Brian Schaffer U.S. Geological Survey

*Lee Gresham Brattle Group *Dave Schmalzer Argonne National Laboratory

*Don Hanson Argonne National Laboratory Seth Schwartz Energy Ventures Analysis

*Keith Harrison Southern Company *Cynthia Simpson Department of Labor

*Jamie Heller Hellerworx, Inc. *Michael Stansky First Energy Corporation

*Whitney Herndon Rhodium Group Kevin Steinberger Natural Resources Defense Council

*Tyler Hodge EIA *Glenn Stoner Colorado Springs Utilities

Thad Huetteman EIA Russell Tucker National Rural Electric Cooperative Association

*Emily Hunter Department of Labor *Boddu Venkatesh ICF International

*John Jacobs Basin Electric Power Cooperative *Ken Walsh Leidos

Elias Johnson EIA *Michael Weiner Van Ness Feldman LLP

Ayaka Jones EIA *Thomas Wos Tristate

*Serpil Kayin Environmental Protection Agency *Tes Wyes Department of Labor

Diane Kearney EIA *Laura Zachary Resources for the Future

*Alan Krupnick Resources for the Future *Song Zhao Leidos
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY. DO NOT QUOTE OR CITE AS 

AEO2017 MODELING ASSUMPTIONS AND NOTE INPUTS ARE SUBJECT TO CHANGE.

2

Team Leader, and Diane Kearney, Operations Research Analyst, presented the attached slides. While the 

slides provide the information presented, discussion and commentary were also encouraged. Participants 

and other stakeholders are encouraged to direct comments on proposed modeling methods and plans to 

Greg Adams (Greg.Adams@eia.gov) or Diane Kearney (Diane.Kearney@eia.gov ).

Regulations

Per the presentation slides, certain new regulations (Coal Ash, Effluent Guidelines, and Cooling Water 

Intake Structures) were not modeled in the Annual Energy Outlook 2016 (AEO2016) nor will they be 

modeled in the AEO2017. Staff resource constraints, a shortened modeling cycle, the site-specific nature 

of the regulations, extensive structural modeling changes required to accommodate these regulations, and 

limited cost data availability are among the reasons for its exclusion from the AEO2017. 

One participant commented that his organization has modeled these guidelines and some plants 

(approximately 180 units) face considerable cost, as much as $500/kW. EIA staff asked if one regulation 

stood out as more expensive, i.e., more important to model, than the others, but the participant had not 

evaluated the regulations individually. EIA staff asked if there were certain regions that are more affected 

than others. According to the participant, eastern plants with wet scrubbers burning eastern coals, 

generally speaking, are more affected by the effluent guideline regulations.

Questions were asked about how EIA handles Regional Haze program requirements and the related 5th

Circuit Stay in Texas. EIA incorporates any plant retrofits or plans that are reported via responses to 

Form EIA-860 capturing compliance, but otherwise does not model the program directly.

Coal Fleet Aging Project

EIA staff highlighted its effort with NETL to explore coal plant data. The goal is to improve 

understanding of coal plant equipment maintenance and repair needs and costs as they relate to the age 

and sub-optimal operation of coal plants. This effort is an outcome of a recent modeler’s forum held in 

June on the subject. That meeting’s summary and presentations are found here: 

https://www.eia.gov/forecasts/aeo/workinggroup/coal/ .

Coal Plant Retirements

One participant commented that many utilities and independent power producer decisions are forcing coal 

plant retirement decisions.

EIA staff reported that, according to the Form EIA-860, there are still some plants that have not reported 

the addition of retrofits to comply with the Mercury Air Toxics Standards (MATS) yet they have also not 

retired, stated that they plan to retire, or stated that they plan to convert to natural gas. A small number of 

plants (roughly 7 Gigawatts) have asked EPA for an extension on MATS compliance, but the number of 

plants with inconclusive retrofit/retirement information exceeds this number. EIA will be following up 

with these plants to determine their status. 

There are also plants that have not been operating. EIA plans to follow-up with respondents to determine 

if these plants also plan to retire. One participant cautioned that EIA should be careful not to presume 

that zero generation indicates an intention to retire because natural gas prices were particularly low in this 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY. DO NOT QUOTE OR CITE AS 

AEO2017 MODELING ASSUMPTIONS AND NOTE INPUTS ARE SUBJECT TO CHANGE.

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period. EIA staff indicated that they are looking at months where natural gas prices are not as low to try 

and mitigate this concern.

One participant recommended that showing remaining coal plant capacity would be more useful than 

showing coal plant retirements in the graphic on slide 19.

Productivity

The emphasis of the discussion part of the meeting was focused on productivity. EIA staff stated that the 

AEO2016, with the exception of the Eastern Interior, assumed year-over-year declining productivity from 

2014 levels. EIA staff continues to be pessimistic about productivity for most regions. EIA staff 

attributes recent upticks in productivity mostly to the retirement of less productive mines, which are no 

longer diluting the average productivity numbers. EIA staff posed some questions to the participants to 

see how they thought economy of scale (or reduction of the benefits of economies of scale because of 

reduced coal demand) might impact productivity. EIA staff noted that the currently active mines in most 

regions have enough recoverable reserves to fulfill production levels. This, in combination with lower 

coal demand, may provide a disincentive for investing in new mines and may contribute to declining 

productivity as more difficult geology is encountered at existing mines. 

EIA staff asked if participants had any insight into evolutionary or revolutionary technologies that may 

affect productivity. One participant stated that driverless vehicles have the potential to reduce the number 

of workers required at a mine and improve efficiency. He also suggested that splitting productivity 

assumptions by geological considerations and technological advances may be an appropriate way to 

tackle the derivation of productivity assumptions, although technological advances are hard to predict. 

In addition, the participant commented that some operators may hold onto employees during a period of 

lower coal demand if the situation were seen as generally temporary, noting recent trends in the Powder 

River Basin (PRB). Therefore, if productivity is calculated based on the number of employees, this has 

potential for misinterpretation of the resulting productivity numbers. [Note: EIA uses a productivity 

calculation that divides tons by employee hours rather than number of employees.] The participant also 

noted that lower demand would reduce the productivity decline due to geological considerations, e.g., the 

Pitt Seam in Northern Appalachia could run longer at higher productivity. 

One participant highlighted the importance of regulations when evaluating productivity. The example 

provided is the soon-to-be released Stream Protection Rule. EIA staff clarified that the Stream Protection 

Rule, the final version of which has not been published, will not be considered in the AEO2017. The 

participant noted that production at certain mines will be severely curtailed in North Dakota and about

60% of North Dakota’s reserves would be sterilized if the draft rule were enacted, affecting the power 

plants that rely upon those mines. EIA staff stated that specific examples such as these are helpful to our 

assessment of existing and pending regulations. A participant also noted that compliance with this 

regulation will likely require additional employees.

Investment

One participant stated that when a downturn in coal demand occurs, capital expenditures will likely fall 

immediately, but eventually companies will be forced to invest in more productive equipment over time if 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY. DO NOT QUOTE OR CITE AS 

AEO2017 MODELING ASSUMPTIONS AND NOTE INPUTS ARE SUBJECT TO CHANGE.

4

they want to stay in business. Another participant stated that if an investment makes economic sense, the 

expenditure will take place. An example of this is driverless vehicles.

One participant asked if investment is explicitly modeled. EIA staff responded that although it is not 

modeled directly, it might be worthwhile to look at investment in terms of its impact on productivity.

Side Cases

A participant asked if there had been a determination of what the side cases might be for the AEO2017. 

The participant is interested in seeing side cases using both the Reference case where the Clean Power 

Plan is included and the case where the Clean Power Plan case is excluded as reference scenarios. In 

other words, there would be two sets of side cases, one where the Clean Power Plan is included and one 

where it is excluded. Though EIA staff stated that this would be unlikely given that the AEO2017 will be 

a short edition, the final set of side cases has not been formally declared. Typical side cases for a short 

edition include: high and low economic growth cases, high and low oil price cases, and high low natural 

gas resource cases.

EIA staff stated that generators are including the Clean Power Plan (CPP) in their planning framework, 

and this is an argument to keep the Clean Power Plan in the AEO2017 Reference case. One participant 

stated that he did not think that this thinking is universal, and many merchant generators have not 

explicitly incorporated the CPP into their planning. 

Federal Coal Leasing Activity

A participant asked if the AEO considers the three year moratorium on federal coal leasing in the outlook, 

or a potential ban on coal production from federal lands. EIA noted that BLM is currently in a listening 

phase of its review, and therefore no assumptions about changes to federal coal leasing policies have been 

made in its modeling thus far. Regarding the moratorium, EIA staff indicated that it is not represented but 

also stated that based on a preliminary calculation, the Wyoming Powder River basin production (100% 

of which is produced from federal lands) should largely be able to satisfy the production levels projected 

in the AEO2016 through about 2035, especially in light of the allowance exceptions to the moratorium. 

EIA staff also noted that while coal production might represent a significant volume on a percentage basis 

for some western states, the volume in tons for those states (not Wyoming) is relatively small. Another 

participant commented that a change in federal coal leasing is likely to be focused on an increase in the 

royalty rate for coal produced from federal lands.

Coal Plant Technologies

A participant recognized that EIA used a 30% capture technology in the AEO2016, but he stated that his 

work indicated that a 90% capture technology would be more economically attractive. Recognizing that 

EIA currently has a limit on the number of technologies it can represent, he wondered if EIA might test 

this 90% technology. EIA staff promised to relay this request to the electricity team. EIA staff 

mentioned that an effort is underway to evaluate an ultra-super-critical with 90% CCS technology option 

and expand the technology options available in the electricity model.