Rarely a day goes by that the fate of Colstrip isn’t mentioned in Montana’s campaign for governor. Republicans and Democrats alike have spoken with conviction about saving the power plant and the town that serves it from “the War on Coal,” as if the 40-year old power plant faced a single challenge.
In truth, the four-unit power plant faces multiple challenges. Three of its six owners, none of which are headquartered in Montana, are being pushed to the exits by new climate change laws in other states. All three of them lobbied for the laws that may end their Colstrip run within 14 years.
There are also retail customers who no longer want electricity from coal. “Coal by wire” the customers call Colstrip electricity, saying carbon dioxide emitted by power plants is warming the Earth, endangering the climate.
One of the owners is faced by rising costs and slimming profit margins, is simply looking to get out.
The chess game involving Colstrip is easiest understood by knowing a little about the players:
Talen Energy: based in Pennsylvania. Talen owns 50 percent of Units 1 and 2, a 30 percent share of Unit 3 and also operates the entire four-unit Colstrip complex. Talen is the corporate offspring of Pennsylvania Power and Light, which not only had shares in Colstrip, but also owned the coal-fired Corette Power Plant in Billings and most of Montana’s hydroelectric dams.
None of those PPL assets remain for Talen, which was created after PPL sold its dams to NorthWestern Energy. The Corette plant was razed because it lacked the pollution controls to trap mercury and cost of adding those controls was considered too much.
With just Units 1 and 2 as Talen’s only Montana assets, the company is working on a “final solution related to its operation and ownership interest in Colstrip.”
Cheap natural gas is pulling down the market price for electricity, which has in turn deeply diminished the profit margin for coal power. Talen is more vulnerable to the market price for electricity than any other Colstrip owner. Because it’s the only owner that isn’t a regulated utility, Talen cannot pass its expenses on to regulated customers for an above-market cost. It has no guaranteed profit margin, as regulated utilities do. Its customers are also free to go if Talen’s prices become too high.
The Clean Power Plan calls for deep carbon dioxide cuts in Montana and could result in the closure of Units 1 and 2. That’s a challenge to Talen. The company’s more indirect threat is a Washington state law authorizing co-owner Puget Sound Energy to begin raising funds to close Units 1 and 2 within a decade. Washington lawmakers and consumers concerned about climate change want PSE out of Colstrip.
Puget Sound Energy: Based in Bellvue, Wash., PSE is Colstrip’s largest shareholder with 50 percent ownership in Units 1 and 2, and 25 percent ownership of Units 3 and 4. Its 667-megawatt capacity is enough to power more than 600,000 homes.
Earlier this month, Washington Gov. Jay Inslee, a Democrat, signed a law allowing PSE to begin banking funds to pay for closure and cleanup of Colstrip Units 1 and 2. The governor also struck down a portion of the law that would have prevented the utility from spending those funds before the end of 2022.
In other words, where two months ago it seemed certain PSE wouldn’t pull out of Colstrip’s older units for at least seven years, the utility could now leave much sooner. Climate change is the impetus behind the Washington push to cut cord on “coal by wire,” meaning electricity created burning coal, which emits greenhouse gases like carbon dioxide.
PSE has been cautious to put a date to its Colstrip exit. In January 2017, PSE will lay out its Colstrip plans as part of a rate case hearing before Washington’s Utility and Transportation Commission. It has already estimated the cost of closing Units 1 and 2 at between $130 and $200 million, including environmental cleanup. The cost to customers of keeping Colstrip online is a big issue.
Portland General Electric: Based in Portland, Ore. PGE owns 20 percent of Colstrip Units 3 and 4. At 296 net megawatt capacity, its power can light nearly 300,000 homes.
PGE is getting out of Colstrip by 2035. That’s the date set by a new Oregon Clean Electricity and Coal Transition plan signed into law in March by Gov. Kate Brown, a Democrat. It’s a law PGE supported as an alternative to a citizen petition forcing Oregon utilities to cut coal power from their portfolios much sooner. It will begin tapering off coal power by 2025 and be almost off by 2030. Renewable energy must also be half of PGE’s portfolio by 2040.
PacificCorp: based in Salt Lake City. PacifiCorp owns 10 percent of Colstrip Units 3 and 4. At 148 megawatts, PacifiCorp’s electricity from Colstrip is enough to power more than 100,000 homes. PacifiCorp is the smallest shareholder at the power plant.
In Oregon, PacifiCorp must stop selling coal power by 2030 because of the Oregon Clean Electricity and Coal Transition plan. However, PacifiCorp sells power in several Western states with no coal power restrictions.
PacifiCorp has indicated to Washington state regulators that it could be getting out of Colstrip as early as 2032 because of regulatory challenges.
Avista Corp.: based in Spokane, Wash. Avista owns 15 percent of Colstrip Units 3 and 4. Unlike Puget Sound Energy, Avista Corp. hasn’t been under pressure by the state Legislature or its customers to get out of Colstrip.
The federal Clean Power Plan would be the most likely cause of Avista getting out of Colstrip. But Units 3 and 4 would likely survive CPP’s greenhouse gas cuts.
NorthWestern Energy: based in South Dakota. NorthWestern, owns 30 percent of Colstrip Units 4 and has an agreement for power from Unit 3 if needed. Like Avista, NorthWestern Corp. hasn’t been under pressure by the state government or its customers to get out of Colstrip. It estimates Units 3 and 4 will last until 2046.
This month, Gov. Steve Bullock invited NorthWestern to join a task force to figure out how to keep Colstrip Units 1 and 2 functional, find a plant manager should Talen and Puget Sound Energy exit. Stay tuned.