Not all coal is created equal. GXS is finding coal that has a higher content than PRB. This is very significant in terms of value. It means the generator does not have to burn as much to produce electricity. As a matter of fact with the higher BTU content generators which currently burn PRB coal will achieve a higher output burning GXS coal. Most units on the system today were built to burn the eastern coal which has a much higher BTU content and as a result these generators can no longer achieve the rated output of the unit (they are derated). So capacity was sacrificed when the industry began using PRB because the PRB coal was significantly cheaper and had less sulfur than the eastern coals. So if/when this new higher BTU Sask coal comes to the market it will be more desirable than PRB because the generators in general will achieve a higher capacity rating. The higher BTU means less coal is burned to achieve the same output and therefore less coal has to be transported to provide the same energy.

New generators are designed specifically for the coal they are going to burn. If they are designed for higher BTU coal then the cost of the unit drops. It means the unit can use a smaller boiler and they save money on the coal handling systems…from the coal yard right to the fly ash removal.

Now in my opinion if I was someone like Peabody I would want control of this Sask coal basin to protect my interests. Buy out the competitor who has the better product.