The coal-fired generating facility at Colstrip has been in the news over the last year. Brace yourself, because it’s going to be in the news again very soon and it may cost you a lot of money. Here’s why.
The Colstrip facility consists of four generating plants owned by six different companies. The oldest two of these four plants are going to be retired this January and most of the corporate partners who own Units 3 and 4 want to get out of Colstrip because they want to get off a sinking ship. What concerns me is that they want ratepayers to bail them out after they make their escape. Beware of this.
Why is Colstrip going down?
There’s not a war on coal. Instead, it is market forces that are driving it into the ground. Coal-fired generation of electricity has become much more expensive than our other options like wind, solar, hydro and gas and the cost disparity is only going to get worse.
Over many years of operation, Colstrip has produced toxic ash ponds have been leaking into the groundwater. That will be very expensive to clean up. With so many corporate partners sharing ownership, I suspect that a lot of finger pointing will begin when it’s time to take responsibility for the mess. What company wants to shoulder costs after all the profits have been made?
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Unlike the other corporate partners, Northwestern Energy is eager to keep Colstrip afloat because the darn thing is a cash cow for them. This is due to NorthWestern Energy’s perverse business relationship with Montana ratepayers.
Montana granted NorthWestern the right to do business as a monopoly. Part of that deal is that the company is given a payment each year based on the value of the assets they own . That payment is over 10%. That’s a sweetheart deal, but it gets worse. Back when NorthWestern bought its share of Colstrip, it paid $187 million for it. A year later when it went before the Public Service Commission, it claimed that the asset was worth $407 million; the PSC completely failed ratepayers by approving that valuation. We’re still paying for that decision.
Now, Northwestern Energy stands to make money even though Colstrip is very expensive for customers. The other corporate Colstrip partners, lacking that sweetheart deal, are eager to get out. When they do, we need to pay close attention to the negotiations over who will take responsibility for the cleanup costs. If ratepayers are not at the table, rest assured we will be on the menu.
I’m going to go out on a limb and make some predictions. Similar to other coal plants around the country, the corporations who are losing money on Colstrip are going to announce that they are closing it down. Northwestern Energy will attempt to convince the PSC, the Legislature and the ratepayers that they should be allowed to assume ownership in order to save Colstrip jobs and prevent Montanans from dying in the dark. NorthWestern tried a similar stunt during the last legislative session and nearly succeeded. Get ready for Round 2.
If/when this scenario happens again, here are some fair questions I would ask as a PSC commissioner:
- How much will the five companies who have profited from Colstrip pay for cleaning up the environmental and economic damage the plants have caused?
- If Northwestern is willing to take an enormous risk by assuming ownership of Colstrip, shouldn’t that risk be put on the backs of shareholders and not ratepayers?
- If there is a transfer of ownership of Colstrip, can we revisit the valuation of the facility and reduce ratepayer’s unfairly high equity payment? That’s only fair.
As voters and consumers, we need to pay attention to what unfolds at Colstrip in the future. Failing to do so has already cost us a lot of money.
Tom Woods is a four-term legislator from Bozeman. He is a Democratic candidate for Public Service Commission.