ASSOCIATED ELECTRIC TO SCALE BACK MISSOURI MINING

The Board of Directors of Associated Electric Cooperative Inc. has decided to scale back coal mining operations in northern Missouri and import low-sulfur coal from Wyoming.

But the board elected not to completely shut down the mine, which was one of the options considered as officials at the Springfield-based utility looked at how to bring the company's Thomas Hill power plant at Moberly into compliance with federal Clean Air regulations.

Company officials also considered several other options, including installing costly scrubbers to reduce sulfur dioxide emissions from the burning of high-sulfur Missouri coal.

The scaling back of operations at the Moberly area coal mine and the partial move to Western coal will take effect in January 1995.

"It's somewhat of a compromise," said Martin Griffin, a spokesman for the electric cooperative. "It is not the lowest-cost option, but it is a lower-cost option than some."

Griffin said the decision by the 12-member board was made last week, although it was not publicly announced until Monday.

Associated Electric plans to shut down two of its three drag lines at the coal mine and eliminate 200 coal mining jobs, said Martin Griffin, a spokesman for the electric cooperative.

For Mike Miller, city administrator of Macon in northern Missouri, the company's decision to keep the mine open is good news for the region's economy.

"We're never happy to lose 200 jobs, but we are happy to have the other 200," said Miller, a spokesman for The Public Committee to Save the Mine.

Closing the mine could have resulted in the loss of 454 jobs and devastated the region's economy, he said.

Miller said Associated officials have vowed to try to eliminate the 200 mining jobs through attrition and retirements, and by transferring employees to other positions.

"Prior to this decision, our backs were against the wall," said Miller. "At least now we have a little breathing room."

Miller said he believes Associated will find that converting to Western coal will ultimately prove more costly than installing scrubbers, particularly when shipping costs are factored in.

The utility plans to ship in Western coal from Wyoming by rail and use it to power two of its three electric generating units at the Thomas Hill facility. The third unit would be powered by a combination of Missouri and Western coal, he said.

The board will reassess the situation in 1997, company officials said.

In a prepared statement, Jim Jura, Associated's general manager, said company officials will decide in 1997 "whether it's in our members' interest to continue mining coal or to switch completely to Western coal."

Utility officials had estimated that switching entirely to Western coal would have cost the company $4.88 billion over the period from 1995 to 2011, compared to $5.72 billion for the scrubber option.

Associated Electric produces and supplies electric power to 43 rural electric cooperatives in Missouri and southeast Iowa, including the Scott-New Madrid-Mississippi Electric Cooperative based in Sikeston.

Noranda Aluminum's huge plant at Marston is Associated Electric's largest customer. Noranda currently spends more than $90 million annually for power at its Southeast Missouri plant. About 40 percent of the manufacturing plant's electricity comes from the Thomas Hill power plant.

Noranda officials could not be reached for comment Monday. Officials there previously had argued for shutting down the Missouri coal mine, contending that installation of costly scrubbers would raise power costs to the point Noranda would have had to shut down one of its production lines and lay off 450 of its 1,200 employees.

Noranda officials had favored the Western coal option as the most cost effective.

It was estimated it would cost Noranda nearly $57 million a year for Thomas Hill power from 1995 to 1999 if the scrubber option were followed. Switching to Western coal would have put the annual cost at $46.4 million, utility officials had said.

As to the board's decision, Griffin said, "It's a little too early to determine what effect it will have on rates." But, he said, the decision "won't adversely affect rates to Noranda."

The board made its decision after holding a series of public meetings around the state.

"Many thought a different decision had already been made, a decision to close the mine, but we listened carefully in the public involvement process," said Jura. "This decision reflects that."