A carbon pollution tax in Washington state could pose challenges for the Colstrip Power Plant in Montana.
Democratic lawmakers and Gov. Jay Inslee are advancing a $10-a-ton tax on carbon dioxide from various sources including power plants fired by natural gas and coal. Washington is one of several states writing climate change laws in the absence of federal action under President Donald Trump, who Inslee has targeted on Twitter.
The bill would affect Colstrip owners Puget Sound Energy and Avista Corp., two of the power plant’s six utility owners.
Puget Sound Energy, which has the biggest ownership stake in the coal-fired southeast Montana power plant, supports the tax, while acknowledging that it would challenge Colstrip’s future economic operation.
“We favor a carbon tax if it's properly structured,” said Grant Ringel, a Puget spokesman. “The money collected has to come back and help our ratepayers.”
Colstrip produces about 17 to 20 million tons of carbon dioxide a year, according to the Environmental Protection Agency.
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In November, Puget included challenges of taxes and regulations on carbon pollution as part of its Integrated Resource Plan. The utility, with more than 1.3 million ratepayers, acknowledged a growing community concern about the role of carbon dioxide emissions on climate change.
City councils in Seattle and Olympia have passed resolutions calling on Puget to stop operating Colstrip by 2025. The company is obligated to shutter the oldest of Colstrip’s four units no later than 2022. It has agreed to be financially ready by December 2027 to close Units 3 and 4.
However, without carbon taxes and increased pollution regulation, Puget estimates Units 3 and 4 could operate into the mid-2030s. Momentum favors increased Washington regulation and taxes on Colstrip power.
What happens in Washington will affect the future of Colstrip Units 3 and 4, in which collectively Puget and Avista hold a 40-percent share.
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Avista Corp has not taken a position on the carbon tax proposal in the state legislature. It has a 15-percent share in Units 3 and 4. The tax may not affect the Spokane-based utility’s consumption of Colstrip power, said Jason Thackston, Avista’s senior vice president of energy resources. Avista has customers outside Washington, where carbon dioxide regulation isn’t a concern.
“We also have customers in Idaho, about a third in Idaho,” Tackston said. “Today all of our generations serve all of our customers and that’s how we anticipate operating forward, but as we face legislation issues, we may dispatch our generation in different ways.”
Colstrip power accounts for 9 percent of Avista’s energy portfolio. Most of the utility’s energy comes from hydroelectric dams, including Noxon Rapids Dam in Montana. Its energy future is in renewable energy and natural gas-fired power plants.
Similar to Avista, multi-state energy company PacifiCorp is a Colstrip owner with plans to remove coal power from energy portfolios in states where coal energy is opposed. PacifiCorp will stop delivering Colstrip power to customers in Oregon in 2030. The company has Washington state customers, as well.
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If the Washington Legislature fails to pass a carbon tax, a voter ballot initiative to create a tax is likely in November. The Alliance for Jobs and Clean Energy has proposed a carbon tax capable of charging major polluters $1 billion a year.
The group proposes spending the tax revenue on renewable energy projects, forestry, job training and energy assistance for low-income utility customers.
Montana officials have not testified before the Washington Legislature about a carbon tax. Attorney General Tim Fox is watching the bill's progress, according to his staff. Gov. Steve Bullock's office did not respond to a call for comment.