MOUNT STORM, WEST VIRGINIA: COAL WAR

All mines close eventually, of course, but until recently the Potomac Complex in West Virginia's Grant County seemed protected by its solid marriage to Virginia Power's Mount Storm generating station. It was built on a tortured, windswept plateau in the mid-1960s only because abundant coal was nearby. The coal was worth mining, in turn, only because Mount Storm would burn it. Tipple and boiler were linked by a two-mile covered conveyor belt that carried coal from the east portal of the mine straight to the storage silos of the power plant. The miners still marvel at the sheer handiness of the setup. "That coal never touched the ground," they say.

But that tidy conveyor has been idle since January in favor of a more invasive coal-delivery system: a fleet of bottom-dumping trucks making more than 200 trips a day, at 80,000 lbs. per trip, to the Mount Storm plant from the nonunion Mettiki mine, 17 miles away and across the state line in Maryland. Some of the old miners claim that the switch is an old-fashioned union-busting effort, but it's both more and less than that.

As dirty and archaic as it may seem in an age of microchips and gene maps, coal has a curiously upbeat future. Not so the union men who mine it. Deregulation in the electric-utilities industry generally favors the cheapest means of making power, and on average, that is still coal. But deregulation also means the arrival of cost cutting as religion, the stern faith that has propelled the U.S. economy to its current world-beating performance. The strongest economy in the world is as strong as it has ever been. But as the brutal tale of the Potomac mines illustrates, this prosperity is not about abundance but about taking bigger risks with smaller margins in a winner-take-all competition. This is a story about pennies--about how a difference of cents on a ton of coal in a local bidding war can imperil a small town in West Virginia's eastern panhandle.

Until the beginning of this year, Consolidation Coal Group of Pittsburgh, owner of the Potomac mines, had a contract to sell 1.5 million tons of coal a year to Virginia Power. Mettiki, the only other high-volume producer in the area, had a contract for a million tons, including some extracted from right beneath Highway 50. With both contracts due to expire on Jan. 1, the utility saw a chance to pit the two against each other in an all-or-nothing bid to be the plant's major coal supplier. It asked both Consol and Mettiki to bid for a five-year contract, with a buyer's option to renew for an additional two. Word went out in August 1995 that Consol had won, apparently assuring the future of the Potomac mines through the end of the century and beyond.

But that was not the last word. Virginia Power had also offered Consol and Mettiki the option of devising any other kind of bid they wanted, and the Maryland mine came through with a 10-year bid that Consol couldn't match. With coal prices still on a downward trend that began 19 years ago, fuel contracts of that length are all but unprecedented. But Mettiki vice president for operations Tom Wynne insists there was nothing nefarious about this. "We invested every inch of our effort for two years into getting this contract," he says. "We did our homework."