Montana lawmakers are considering two bills to tax carbon pollution, and not surprisingly owners of Colstrip Power Plant say the measures would kill the facility.
Democratic legislators are floating two bills creating a $10-per-ton tax on carbon dioxide from various sources, including coal-fired power plants. Theirs aren’t the first attempts targeting Colstrip. Washington State, where 1.8 million customers draw power from utilities with Colstrip ownership shares, twice attempted unsuccessfully to tax greenhouse gases last year, first in the Legislature, then by initiative.
The message delivered to Montana lawmakers by carbon tax supporters is to impose a tax in Montana and reap the revenue, or draw none of the benefits when another state’s carbon tax bites Colstrip.
“At some point, there’s going to be a cost on carbon, and that’s either going to be imposed on the state of Montana, or you can be in the driver’s seat and we can collect that money at home,” said Ann Hedges of the Montana Environmental Information Center. “I think it’s a better idea that we collect the money here at home and that this state craft a market-based solution to the crisis that we are facing today.”
Hedges made her comments Jan. 31 during a legislative hearing about a carbon tax proposed by Rep. Mary Ann Dunwell, D-Helena. The hearing was the first of two spread over a week’s time in Helena. A second carbon tax proposal by Sen. Dick Barrett, D-Missoula, will be taken up Thursday.
Dunwell’s bill targets carbon emissions of 25,000 tons or more, meaning that small industrial polluters would avoid the tax. Still, there are 22 polluters who would pay. The businesses range from the Malteurop North America malting facility in Great Falls to the Colstrip Power Plant, according to EPA pollution data.
The malting business is the smallest polluter among the 22, with 33,704 metric tons of carbon dioxide annually. Colstrip tops the list at 14.3 million tons of carbon dioxide per year. The southeast Montana power plant has been identified as a top-15 producer of greenhouse gases by the Environmental Protection Agency.
All told, 22 businesses subject to the tax produce 20.8 million tons of carbon annually. The four biggest polluters after Colstrip are in the Billings area — Phillips 66 refinery, Yellowstone Energy Limited Partners, CHS refinery and ExxonMobil refinery.
Legislative fiscal analysts expect that $210 million a year in carbon taxes would be raised under Dunwell’s bill, $21 million of which would be dedicated to helping communities like Colstrip transition away from fossil fuel-based economies. The remaining money would go to general state government spending, or to programs supported by coal tax revenue, which has been declining for years.
Colstrip’s monopoly utility owners argue that a carbon tax means consumers will pay more for electricity. Dunwell counters that Montanans already pay a climate change price for carbon pollution.
Carbon dioxide emissions, most scientists conclude, contribute to the trapping of the sun’s heat within the earth’s environment, which warms the planet, causing adverse climate changes.
“Frankly there is a cost to society,” Dunwell said. “By emitting carbon in the atmosphere there’s a cost to our agriculture, to our tourism economy, to our outdoor economy, to our public health and our national security, and certainly our safety.”
The two Colstrip owners objecting to the carbon tax bills are NorthWestern Energy, Montana’s largest monopoly utility, and Avista Corp. of Spokane, Washington.
“Coal-fired power from Montana is an important part of Avista’s portfolio. It is available 24 hours a day, seven days a week and represents a good value for our retail customers,” said Tom Ebzery, Avista lobbyist.
Speaking at the Dunwell hearing, Ebzery acknowledged that challenges are mounting for Colstrip. Already, two of Colstrip’s four units are slated for shutdown no later than 2022 in order to settle an air pollution lawsuit. In Washington, Democratic Gov. Jay Inslee and legislators are attempting to end coal power consumption by 2025, a move that would shutter Colstrip entirely.
Even Avista, pressed by state regulators to come up with a power plan for a post-Colstrip era, has identified a way forward without the Montana power plant that has helped electrify the Pacific Northwest for more than 40 years. If the power plant’s regulated owners can’t use coal power, then Colstrip energy will have to be sold on the open market, where it already struggles to compete against cheaper energy sources, like natural gas.
“With Colstrip being exposed to the market, a carbon tax could price the power plant out of market and potentially kill the plant,” Ebzery said. “We may not like what the other states are doing, but that doesn’t mean that Montana should provide the last nail in the coffin at a plant that is a valuable asset and had been for many years.”
NorthWestern argued a carbon tax was regressive once the utility passed the cost on to consumers.
“Our customers are already paying taxes and fees each month for things beyond the service of electricity, for example property taxes alone account for nearly 15 percent of a bill," said David Hoffman, NorthWestern lobbyist. “A tax on electricity which is what this ultimately is, is one of the most regressive taxes you can think of. Every customer pays the same amount on usage regardless of income level or wealth.”
Dunwell said Wednesday that NorthWestern customers have paid a carbon fee for several years now. The utility baked a carbon fee into its 2014 purchase of hydroelectric dams from PPL, she said. The assumption was that a carbon tax was imminent. Once state regulators approved the $870 million sale, the carbon fee remained in the 30-year dam payment plan passed onto customers, creating an additional $247 million burden for ratepayers. The actual tax never materialized.
Barrett’s bill works a little differently than Dunwell’s. It creates a $10-per-ton tax on carbon dioxide, but only on power plants. It creates incentives for companies to offset their carbon pollution by investing in renewable energy. Barrett's plan uses revenue raised through carbon taxes to lower the property tax burdens of certain low-income Montana homeowners and renters.
The state-level push for carbon taxes is a response to the federal withdrawal of the Obama-era Clean Power Plan and the Paris Climate Agreement.