US Coal Power Generation Extends Plant Lifetimes Through Long-Term Contracts
Summary
Alliance, Hallador and Babcock & Wilcox say US utilities are keeping coal plants open longer, with multi-year coal deals and capacity sold through 2035.
US utilities are delaying coal plant retirements and locking in longer contracts for coal, plant capacity and boiler repairs. Coal producer Alliance Resource Partners (ARLP), coal miner and coal-plant owner Hallador Energy Company (HNRG) and boiler maker Babcock & Wilcox Enterprises (BW) all described the shift on third-quarter 2026 earnings calls held between October 26 and November 9 [1][2][3].
Why the coal fleet is staying online longer
For several years, US utilities planned to retire coal plants and replace them with gas-fired plants and renewables. A coal plant burns coal in a boiler to make steam that drives a turbine, so it needs a steady coal supply and regular boiler maintenance. Plants expected to close soon often got only minimal upkeep. Peabody Energy (BTU) management said maintenance outages used to be modest because few owners wanted to spend on a plant that was going out of service [4].
The gap between power demand and new-build timelines changed that math. Data-center and industrial load is growing, while Alliance, citing an industry consultant, said the leading gas turbine manufacturer is sold out of new deliveries until 2031 [1]. With new firm power slow to arrive, Alliance management argues that keeping existing coal units open longer and running them harder is the fastest and cheapest way to serve that load [1]. Once a utility decides to keep a plant open, it needs to secure coal for the years ahead and is willing to pay to repair the boiler again.
Coal supply, plant capacity and boiler repair are all booking longer contracts
Alliance's coal contracts are getting longer. Dominion Energy, its largest historical customer, signed a multi-year supply agreement that restarts the Metiki mine, which was idled in the first quarter of 2026, bringing nearly 150 miners back to work and covering 700,000 tons in 2027 [1]. In the third quarter, Alliance added 4.2 million committed and priced tons through 2028 and has 31.7 million tons committed and priced for 2027; management said 2028 pricing is a little stronger [1].
Hallador has sold the capacity of its Merom power plant more than a decade forward. Capacity is the payment a plant earns for promising the grid it can generate when needed. In 2026, Hallador made large capacity sales in March, May and October, each priced higher than the one before, and about 95% of Merom's accredited capacity is now under contract through 2035, with roughly two-thirds through 2040 [2]. Management said energy prices are up about 20% this year, that at those prices the market is calling for Merom to run nearly all the time, and that its target of 5.2 million megawatt-hours is higher than the plant has run in the past [2].
Babcock & Wilcox sees the change in maintenance demand. It said utilities are increasing investment in refurbishing, recommissioning and operating existing coal plants, that some decommissioned or peaker-only units are being upgraded to run as baseload, and that parts-and-services bookings hit a record in the third quarter [3]. The three companies sit at different points of the chain, coal supply, power generation and repair, and all describe plants that are no longer being managed on a countdown to retirement.
Contracts come first; higher coal burn is not expected before late 2027
Bargaining power is shifting toward mines that can supply reliably and plants that can generate on demand. Utilities seeking security of supply are accepting longer and higher-priced contracts, as Alliance's out-year pricing and Hallador's rising capacity prices show [1][2]. Contracts are running ahead of actual consumption, however: Alliance expects the more meaningful increase in customers' coal burn to begin in late 2027 and into 2028 [1].
Current volumes do not yet show demand rising. Peabody's Powder River Basin shipments fell 18% year over year in the second quarter as plants took long maintenance outages [5], and CSX's third-quarter domestic coal volume fell on lower utility shipments [6]. Hallador still reported a net loss for the third quarter [2]. Some life extensions are mandated rather than economic: NiSource received a fourth federal order to keep its Schahfer coal units running [7]. Dominion has filed air permits for a new gas-fired combined-cycle plant at the Mount Storm site [8], so coal may be a bridge. The metrics to track are utilities' actual coal burn in late 2027 and 2028, and whether Alliance's shipments follow.
Companies exposed to the coal life-extension trend
- Peabody Energy (BTU): Peabody supplies thermal coal to US utilities, and management has already seen plants take longer outages to keep running longer [4]; if plants run harder after that work, its long-term shipments could benefit, but near-term shipments have fallen [5].
- Fuel Tech (FTEK): Its FUEL CHEM business provides chemical treatment for coal boilers that is used as the units operate, with third-quarter revenue of $4.93 million versus $4.78 million a year earlier [9]; longer and harder coal-unit operation could raise its volumes, though the business is small.
- CSX (CSX): The eastern US freight railroad hauls domestic utility coal, and management said in the second quarter that recent plant life extensions will support domestic utility burn [10], but third-quarter domestic coal volume still fell [6], so any benefit has not reached volumes.
Sources
[1] Drillr · Alliance Resource Partners (ARLP) · 2026-10-26 · Earnings call
The existing coal fleet will be needed longer, and running it harder is the fastest and most affordable way to serve that load.
[2] Drillr · Hallador Energy (HNRG) · 2026-11-09 · Earnings call
[3] Drillr · Babcock & Wilcox Enterprises (BW) · 2026-11-09 · Earnings call
[4] Drillr · Peabody Energy (BTU) · 2026-07-29 · Earnings call
[5] Drillr · Peabody Energy (BTU) · 2026-08-06 · Q2 2026 Form 10-Q
[6] Drillr · CSX (CSX) · 2026-10-21 · Q3 2026 Form 10-Q
[7] Drillr · NiSource (NI) · 2026-10-28 · Earnings call
[8] Drillr · Dominion Energy (D) · 2026-07-31 · Earnings call
[9] Drillr · Fuel Tech (FTEK) · 2026-11-03 · Q3 2026 Form 10-Q
[10] Drillr · CSX (CSX) · 2026-07-22 · Earnings call
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