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Colstrip moves to cut ties with Rosebud Mine as Westmoreland falters

Colstrip moves to cut ties with Rosebud Mine as Westmoreland falters

Once unthinkable, Colstrip power plant and Rosebud Mine soon could be legally separated as utilities and lawmakers conspire on a future without Westmoreland Coal Co.

In the Senate Natural Resources Committee on Friday, Sen. Duane Ankney, R-Colstrip, and two power plant shareholders revealed plans to replace Rosebud Mine coal with fuel from an unidentified source, though most likely a coal mine in Wyoming or southeast Montana.

The state Department of Environmental Quality is busy permitting a coal unloading facility so the power plant can begin unloading coal train cars. And there’s a bill to provide state loans to the power plant’s six large utility owners to pay for it.

Westmoreland Coal Co. is going through bankruptcy, meaning that Rosebud Mine could be under new ownership by spring. The company and its creditors have indicated they will not keep the mine’s supply contract with Colstrip power plant, which has Colstrip’s utility owners scrambling for different coal. Although it was suggested Friday that the bills and permitting were just a ruse to force Rosebud Mine’s future owners to negotiate.

Friday, Ankney tried to persuade lawmakers to separate the power plant from the mine. Since 1975, the power plant and the mine have been legally connected like conjoined twins. Montana law says the power plant has to burn Rosebud coal.

Specifically, Colstrip Units 3 and 4, the youngest and biggest generators in the four-unit complex, are obligated to burn Rosebud coal, explained Mark Taylor of Talen Energy.

“Units 3 and 4 at Colstrip are required to use Rosebud Mine coal, and given that some of the uncertainties associated with Colstrip’s fuel source, we felt it incumbent upon us to initiate the process to explore alternatives out there in the marketplace,” Taylor said.

During their testimony in Westmoreland's bankruptcy, the power plant's owners, Talen, NorthWestern Energy, Puget Sound Energy, Avista Corp., Portland General Electric and PacifiCorp, insisted that higher Rosebud coal prices could be cause for shutting down the power plant. NorthWestern argues that getting the power plant approved for coal from another mine could take a couple of years, during which Colstrip would be idle and perhaps never reopen.

The current coal contract between the mine and power plant expires in 2019. For more than a year negotiations for a new price have continued, with no agreement reached.

Already there are plans to close Units 1 and 2 within four years to settle an air pollution lawsuit. Washington state, where Puget, Avista and PacifiCorp do business, is considering banning coal power by 2025. In Oregon PacifiCorp is legally blocked from selling coal power after 2030, and Portland General Electric must do the same by 2035. Concerns about climate change are driving those deadlines.

Two of Colstrip power plant’s owners, Puget and Avista, plan to be financially ready to shutter Colstrip eight years from now, in 2027.

But the future of Rosebud Mine is the more immediate concern.

“We’ve all read in the papers what’s going on with Westmoreland and I think to secure an alternate fuel source if need be,” Ankney said explaining the reason for the bill. Cutting ties with the power plant would also mean letting Rosebud’s only customer shop around. The mine employs about 300 people. Ankney said he didn’t take the move lightly.

“I spent 32 years in that mine. The last thing I’d like to see is for them to have to go somewhere else to get the coal,” Ankney said. “What’s worse than that is if they can’t get any coal and the power plant has to close. That wouldn’t serve anybody in this body one bit because there’s a little bit of coal dust on every dollar we spend up here.”

The senator said Wyoming coal would be an unlikely replacement because of rail cost. Colstrip has a big appetite. It’s the second largest coal-fired power plant in the West and consumes 10 million to 13 million tons of coal a year. Based on U.S. Energy Information Administration mine data, there’s only one Montana coal producer big enough to meet that kind of demand, Cloud Peak Energy’s Spring Creek Mine, which is about 70 miles away. Rosebud and Colstrip power plant are neighbors.

But distance wouldn’t be the only change. Cloud Peak’s mines are non-union. Rosebud’s miners belong to the International Union of Operating Engineers.

There would be air pollution challenges. Not all coal burns the same. Coal from a mine other than Rosebud could mean changes to pollution controls at the power plant to comply with clean air permitting.

For supporters of the plan to cut Rosebud Mine loose, Anne Hedges of the Montana Environmental Information Center cautioned that all the bills and permitting so far might not be a ruse. In 1997, Montana lawmakers voted to deregulate its utilities, only to find out later that Montana Power Company, a standard bearer for stability, planned to sell off its dams and power plants, including its share in Colstrip.

“I worry about the implications of this bill. Maybe this is just a leveraging tool in the bankruptcy proceedings and the owners are trying to get a new contract with the Rosebud Mine. That is possible,” Hedges said. “It is quite possible this is just using legislation, which I think is inappropriate, to leverage an individual contract between two parties. That is possible. However, when we passed deregulation, nobody thought that Montana Power was going to sell all the generating assets either. What you are doing is allowing them to get coal elsewhere. Right now by law they're not allowed to do so. I think that’s a bad deal.”


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