Cloud Peak Cuts Post-Retirement Health Care

Nov 13, 2018

Cloud Peak Energy logo
Credit Cloud Peak Energy

One of Wyoming’s largest coal companies cut health care benefits for its retired workers. In its third quarter report released October 25, Cloud Peak Energy said the move will provide it with $19.4 million in net income. It was announced to employees in August. The report also recounted an approximately 15 percent reduction in coal shipments compared to Q3 last year. Coal has been costlier to remove from the ground due to additional overburden from digging deeper.

Cloud Peak explained it will provide benefits for the remainder of 2018 and give a lump sum contribution for 2019 benefits. It maintains an unfunded medical plan to eligible employees.

University of Wyoming energy economist Rob Godby helped explain the situation. He said the company needed to make cuts to improve its earnings.

“So, the problem that Cloud Peak faces, if they want to cut costs, they have to cut costs without cutting production. Right? Because they don’t want to reduce sales,” Godby said.

And according to Godby, cutting retirement benefits will likely help offset losses from the past quarter.

Cloud Peak is also planning to move its headquarters by the end of 2018 from Gillette to the Cordero Rojo mine in the Powder River Basin to cut costs.

But the cutting of post-retirement medical benefits has been a blow for retirees like Anne Zollinger. She spent twenty years working for Cloud Peak, mostly as a warehouse technician. She retired this past May and expected $600 a month to help pay for her current medical plan until she was eligible for Medicare at the age of 65. She’s 55 now.

"I put my time in, worked safely for over twenty years and now I don’t have what was promised to me,” Zollinger said.

She says she’s now getting $250 per month, but doesn't know what the future holds for benefits. Plus, she says it doesn’t seem like there’s any recourse.

"I feel very powerless to change this, it’s a decision they made in spite of the number of retirees that they had. I worked safely for twenty years and four months after I retire, this is what’s done,” she said.

Zollinger said she wishes she could be grandfathered into the health care benefits.

Godby said there is precedent of coal companies cutting obligations like this, but it typically comes during bankruptcy negotiations.