HELENA — In Montana’s hard-fought U.S. Senate race between Jon Tester and Denny Rehberg, the fate of a coal-fired power plant in Billings has become a flash point, with Rehberg blaming Tester and the Obama administration for the plant’s likely closure in 2015.
Rehberg, his fellow Republicans and the plant’s owner, PPL Montana, point to a 2011 federal air-quality regulation as a primary reason for the recently announced “mothballing” of the 154-megawatt Corette power plant.
“Sen. Tester was warned that, if he voted a certain way, it would put plants at risk,” Rehberg said at a campaign stop this week. “And the Corette plant has just announced that they will be closing their doors in 2015, costing 35 jobs and $10 million out of our economy. That is the wrong thing to do, at a time when you’re trying to rebuild your economy.”
What was not mentioned by Rehberg is that the 2011 rules regulating certain power-plant emissions have been delayed for nearly 20 years — and stem in part from a 2008 federal court order, which said the U.S. Environmental Protection Agency illegally exempted power plants from clean-air regulations passed by Congress in 1990.
Tester’s vote, to which Rehberg refers, was against a Republican-led effort in Congress this summer to block and delay these rules again. The effort failed.
Several Montana business groups, as well as the power and coal industries, supported the delay, and the groups asked Tester and Sen. Max Baucus, both Democrats, to vote for it. Both voted against it.
Tester thought the delay effort was a “red herring” proposal designed to be a campaign issue, and supports the new EPA rule, his spokesman Aaron Murphy said this week.
“Jon believes in responsible measures that protect Montana’s clean air and water without destroying our traditional energy resources, and these rules fit that bill,” Murphy said.
PPL Montana acknowledges that while the EPA rules played a role in the company’s decision to mothball Corette, regional power markets also are a key factor, as the long-range forecast shows prices far below what PPL considers profitable for the plant.
The boom in natural gas production in America has helped push the cost of generating electricity to historic lows, depressing the wholesale power market and making many coal-fired power plants unprofitable, according to industry observers.
Environmental groups and Tester also note that PPL remains hugely profitable and is investing in power plants overseas. They say it could afford to upgrade the Corette plant to meet the 2011 regulation by 2015, but chose not to.
“The cost to control these pollutants is a drop in the bucket of PPL’s annual profits,” Anne Hedges, program director for the Montana Environmental Information Center, wrote this week. “Yet PPL decided that Corette wasn’t worth a small investment.”
That investment, according to PPL, is $38 million, to install filters that would capture enough heavy metals and acid gases from coal burning at Corette to comply with the new EPA regulations.
PPL Montana spokesman David Hoffman said it would take two years to build the “bag house” containing the filters, and the company decided that with power markets expected to remain soft, the cost didn’t pencil out.
The company announced Sept. 20 it would mothball the plant in 2015, when the EPA regulations take effect. Hoffman said PPL wanted to give the 35 workers and the Billings community time to plan for the closure.
The plant has a $2.9 million annual payroll, pays $5 million a year to outside vendors for maintenance and other services, and pays $1.8 million a year in property taxes, Hoffman said.
Two of PPL Montana’s coal-fired power plants at Colstrip already meet the new EPA standards, because they have newer pollution-control equipment, and the two other Colstrip plants should be able to, with an upgrade, he said.
“We’re still examining the technology right now,” Hoffman said of the Colstrip plants. “You have the economy of scale at Colstrip, as well.”
Colstrip has 2,000 megawatts of generating capacity, or nearly 13 times that of the 44-year-old Corette plant.
Dave Klemp, chief of the state Air Resources Management Bureau, said the new EPA rules regulate mercury and numerous “air toxics” produced by coal-fired power plants. The state is the primary enforcer of the EPA rules.
Montana already has its own, relatively strict mercury standard, so plants here have only the air toxics to worry about. The EPA gives plants three years to comply with the rule, and plants can ask for a one-year extension, until 2015.
Klemp said no Montana plant owner, including PPL, has spoken yet to state regulators about complying with the rule.
“Some may not have to do anything in order to comply,” he said. “They may have existing controls that are adequate. … Generally speaking, the companies come in and talk to us about what their requirements are and their obligations.”
The standards stem from a 1990 amendment to the Clean Air Act, in which Congress listed 189 air pollutants that must be controlled. The EPA began imposing regulations for these pollutants for many industries, but the utility industry successfully resisted and escaped them for many years.
A 1999 EPA report to Congress said power plants are significant emitters of these pollutants. Under President George W. Bush, the EPA exempted power plants from the congressional regulations and devised new ones of its own.
Fifteen states — Montana wasn’t one of them — sued to invalidate the EPA’s actions. In February 2008, the U.S. Circuit Court of Appeals in Washington, D.C., said EPA had illegally exempted power plants from the 1990 amendments.
Under President Barack Obama, the EPA began working on rules for power plants and released them in November 2011.
When asked this week which air-pollution rules he would support for power plants, Rehberg wasn’t specific but said the EPA should back off on its current rule and consider ones that might be more flexible for different types and ages of plants.
Hedges, of MEIC, said the rules are long overdue, and that the utility industry has avoided them purely on “raw political power.”
“These regulations have been on the books for so long; industry has known about them,” she said. “This (controversy) has nothing to do with politicians today. It has to do with a history of wanting to clean up the air and protect the public.”