COLSTRIP - One of the owners of the Colstrip coal-fire power plant has agreed to set aside millions of dollars in recovery for the community and move toward closure of all four units within the next decade, Washington state officials said Friday.
Puget Sound Energy will set aside a minimum of $10 million for economic recovery efforts for Colstrip and sets aside a plan to pay down all debts on the plant by 2027, according to the Washington Utilities and Transportation Commission.
Environmental groups cheered the ruling Friday and said it signaled an end date for the plant. Montana Attorney General Tim Fox, who supported the agreement, said in a letter to Washington state regulators that the agreement does not establish a shutdown date, only a plan to pay off remaining debts in the next 10 years.
“In representing the state’s interests in this rate case, my office has made clear through negotiations with PSE our expectation that the utility fulfill its responsibilities to the state of Montana. This settlement is a good start, and we urge the Washington UTC to approve it as agreed upon by the parties," Fox said in a written statement.
Gov. Steve Bullock praised the deal through a spokeswoman.
"The governor believes this is a good start. We will protect the workers and community of Colstrip and ensure the successful transition of the region to a diversified economy, and that includes holding PSE accountable," spokeswoman Ronja Abel said in an email.
The company had previously indicated it would close its two oldest units, 1 and 2, by 2022, but had never before set an ending date for operations of the newer 3 and 4 units. Colstrip accounts for about 30 percent of Puget Sound's power generation.
State Sen. Duane Ankney (R-Colstrip) sponsored bills that would have brought more money to Colstrip, but he's happy with what the community got in the deal. He also said the other owners of Colstrip units 3 and 4 can not depreciate their shares by 2027 and retains hope those units will not close.
"The reality of it is, when you flip that light switch, you want your lights to come on,” Ankney said. "As long as Colstrip is providing low-cost reliable energy, whether the wind blows or the sun shines, I think Colstrip will be generating power.”
The Olympia, Wash-based utilities commission cautioned Friday that this agreement had yet to be approved by its appointed commissioners. Puget Sound Energy is based in Washington state, and most of Colstrip's customers are in the Pacific Northwest.
The agreement arose out of a rate-case decision from the Washington utilities commission. In January, Puget Sound Energy asked the commission to approve a 7.6% rate increase for its electric customers.
The Colstrip plants employ 360 workers and generate up to 2,000 megawatts of power.
Puget Sound Energy and Talen Energy each own half of Colstrip units one and two. Talen is the plant’s primary operator and shares ownership of units 3 and 4 with five other utilities
Puget officials have said they want to transition away from buying coal-fired power and are losing money on Colstrip’s older 1 and 2 units.
Colstrip’s largest customers are in Washington and Oregon. Voter-approved mandates in both states have required utilities to boost their renewable-energy portfolios, which, in turn, has depressed demand for coal.
In April 2014, Washington Gov. Jay Inslee signed an order directing utilities that work with out-of-state coal plants, such as Colstrip, to phase out those sources. The order was part of Inslee's aim to reduce Washington's carbon emissions and promote renewable energy.
State legislatures in Oregon and Washington this year also passed bills that are designed to hasten or make it easier for utilities in those states to stop providing coal-fired power from the Colstrip plants.
Anne Hedges of the Montana Environmental Information Center praised the agreement Friday.
“This is a major milestone, because far too often in Montana out-of-state companies have shut their doors with little notice and left communities with contaminated land and water, and nothing economically. The huge shifts in energy markets have made planning difficult, but now that there is a realistic end date for the life of the Colstrip plant. It provides Montana the time and money to prepare for the transition,” Hedges said in a statement.