Peabody Signs Long-Term Coal Deal With Missouri Cooperative AECI

Peabody Energy, one of the largest producers of thermal coal in the U.S., has signed a major supply agreement with electric cooperative Associated Electric Cooperative Inc. (AECI), committing to deliver between 7 million and 8 million tons of coal annually to fuel two AECI Missouri power plants—the 1.2-GW New Madrid Power Plant and 1.2-GW Thomas Hill Energy Center—for “at least the next seven years.”

The new contract, announced April 15, stems from a long-standing relationship between AECI and Peabody’s North Antelope Rochelle Mine (NARM) in Wyoming’s Powder River Basin. But it also points to an upturn for coal deliveries at a time when U.S. power markets are grappling with surging electricity demand and reassessing the reliability role of dispatchable fossil resources.

“This substantial agreement demonstrates the ongoing importance of Peabody’s coal in providing reliable, affordable baseload electricity for years to come,” said Peabody President and Chief Executive Officer Jim Grech. “American demand for electricity is growing for the first time in many years given increased power needs from data centers and artificial intelligence. We are pleased to extend our long-term relationship with Associated and look forward to supplying their fuel needs well into the future.”

Coal Plants Remain Central to Missouri’s Grid

AECI’s Thomas Hill Energy Center, located in Clifton Hill, Missouri, consists of three active coal units: Unit 1 (171.7 MW, commissioned in 1966), Unit 2 (272 MW, 1969), and Unit 3 (738 MW, 1982), with a combined net capacity of 1,181.7 MW. The New Madrid Power Plant in Marston on the Mississippi River comprises two 650-MW units commissioned in 1972 and 1977, respectively. Both facilities burn low-sulfur subbituminous coal from the Powder River Basin and have undergone periodic retrofits to improve efficiency and environmental performance.

Combined, the two plants account for more than 40% of AECI’s generating capacity and represent the backbone of its baseload fleet. According to AECI’s 2025 system facts, the cooperative operates 6,469 MW of owned and contracted generation capacity across its three-tiered system, which serves 935,000 meters and more than 2.1 million people in Missouri, northeast Oklahoma, and southeast Iowa.

Peabody’s NARM operation—located about 65 miles south of Gillette, Wyoming—is the largest coal mine in North America and among the most productive globally. In 2024, it shipped approximately 60 million tons of coal and has delivered coal to AECI facilities for more than 30 years. The mine produces low-sulfur, high-moisture subbituminous coal averaging 8,800 BTU/lb, well-suited for units designed to accommodate Powder River Basin coals.

NARM holds more than 700 million tons in recoverable reserves and is a key asset within Peabody’s U.S. thermal portfolio. Despite broader structural decline in domestic coal use over the past decade, NARM’s scale and rail connections have helped it retain a foothold in baseload utility markets.

Policy and Load Growth Shift Sentiment Toward Coal

The AECI contract follows a string of regulatory and market developments that have begun to reframe thermal coal’s role in the U.S. power mix. Earlier this month, President Donald Trump issued a sweeping set of executive orders and invoked the Defense Production Act (DPA) to promote coal production and block further coal plant retirements, explicitly citing the surging electricity needs of artificial intelligence (AI) and data centers as a matter of national priority.

The“Reinvigorating America’s Beautiful Clean Coal Industry,” signed on April 8, for example, mobilizes federal agencies to dismantle regulatory and financial barriers to coal, fast-track mine permitting and leasing, and promote coal exports and advanced combustion technologies. By reclassifying coal as a strategic material under the DPA, the administration has sought to unlock up to $200 billion in low-cost financing through the DOE Loan Programs Office and directed the Department of Commerce to elevate U.S. coal as a global export priority.

At the grid level, the orders direct the Department of Energy to invoke emergency powers under Section 202(c) of the Federal Power Act to prevent the retirement of coal plants deemed essential to reserve margins and system reliability. Coal units at risk of closure due to environmental compliance costs are granted a two-year reprieve from tightened Environmental Protection Agency (EPA) Mercury and Air Toxics Standards (MATS), while federal agencies are instructed to review—and potentially roll back—regulations that hinder coal production or investment.

While the measures mark the most aggressive federal intervention in the coal sector in more than a decade, analysts remain cautious. No major U.S. utilities have announced new coal builds, and coal still faces stiff economic headwinds from low-cost natural gas and renewables. But for older coal plants already on the grid, particularly those tied to industrial demand or regional capacity constraints, the policy shift appears to have reopened discussions about their long-term role in a reliability-constrained, AI-driven power era.

Industry observers suggest the shift reflects a broader recalibration already underway among utilities, merchant developers, and fuel suppliers as they confront explosive power demand growth, reliability constraints, and long lead times for replacement capacity. During Peabody Energy’s fourth quarter 2024 earnings call, CEO Grech pointed to mounting deferrals of coal unit closures, saying, “Following multiple years of premature retirements in coal-fueled generation, we’ve now seen deferrals and retirement plans extending the lives of 51 coal units in 17 states, constituting 26 GW of power—enough to power 20 million homes.”

That reassessment is being echoed in the contracting behavior of utility buyers. At a CERAWeek 2025 session in March, speakers cited a marked shift toward longer-term coal procurement as utilities hedge against uncertainty. “Looking back five years ago, no utility would do an extended contract,” said Timothy Leyland, senior vice president of sales and marketing at Alliance Resource Partners. “At most three years. But things have changed. We just executed a contract that goes to 2031.” The return of long-term contracting is essential to support capital investment across the coal value chain, particularly for logistics and equipment, he noted.

Other panelists described a changed environment in which coal is no longer viewed solely as a legacy resource, but increasingly as a strategic buffer. “People are talking about reopening plants that were already retired,” said Jud Kroh, president of Robindale Energy. “We’re seeing a shift. Not just maintaining what’s there—it’s people actually saying, ‘Maybe we need to go get that back online.’” Kroh stressed that if load from AI and data centers materializes as forecasted, “I think every coal plant is going to have to stay online for the foreseeable future.”

Private Capital Eyes Coal’s Reliability Edge

Peabody executives have also disclosed growing inbound interest from private equity and data center developers exploring ways to pair long-life coal plants with power-hungry AI workloads. “We have been approached by household name private equity funds that are looking for creative means to match up reliable, low-cost coal plants with growing data center needs,” Grech said on the February earnings call.

As a not-for-profit generator, AECI has remained focused on long-term cost stability and system reliability. Its three-tiered structure allows coordinated generation and transmission planning across 51 distribution cooperatives. In addition to its coal units, AECI operates a fleet of combined-cycle and peaking plants fueled by natural gas, as well as 1,240 MW of contracted wind and 492 MW of federal hydropower.

But coal remains foundational to its ability to meet baseload needs. “We have a diverse resource mix, but our coal plants remain essential to meeting member demand—especially during extreme conditions,” AECI notes in its 2025 factsheet.

—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).