Closing Colstrip 3, 4 will lead to big job losses, study says

Posted at 5:14 PM, Jun 25, 2018
and last updated 2018-06-25 19:14:05-04

HELENA – Closing the two newer coal-fired power plants at Colstrip in 2027 would cost the state 3,000 jobs, millions of dollars in tax revenue and lead to higher electricity prices, says a study commissioned by an arm of the state’s largest business lobby.

The study, conducted by the University of Montana Bureau of Business and Economic Research for the Montana Chamber Foundation, examined the impacts of the closure of Colstrip power plants 3 and 4.

The utility owners of the plants, including NorthWestern Energy, have not said when or if they plan to shut them down.

But Montana Chamber of Commerce President Webb Brown said the future of the Colstrip plants is a question mark, and that his group wants the state to be prepared to deal with the impacts or do what it can to avoid them.

“Do we need to look at greater remediation? Is there an opportunity for the plants going longer?” he said Monday at a Helena presentation of the study results. “Can we look at other ways of adapting for the tax base? … Let’s get started looking at it now.”

The Montana Chamber Foundation, which paid for the study, is financed primarily by big corporations operating in the state, including NorthWestern Energy, the owner of the Colstrip coal mine and some owners and operators of the Colstrip plants.  

A leading environmental lobby criticized the report Monday, saying it ignores the impacts of power development that may replace coal-fired power at Colstrip and misstates the impact on electricity consumers.

“Replacement energy is cheaper these days than it was five years ago,” Anne Hedges of the Montana Environmental Information Center told MTN News Monday. “And they’re pretending in this study that in 20 years, coal will be out-competing these resources. It’s not true today. Why would it be true in 20 years?”

Colstrip power plants 1 and 2 will shut down by 2022, as part of a court settlement. The newer plants, 3 and 4, aren’t scheduled for closure and are owned by a half-dozen utilities in the Northwest.

Patrick Barkey, director of the UM bureau, said it studied what the closure of 3 and 4 would look like if it happens 10 years from now, using a model that already factored in the closure of the two older plants.

The study also included the impacts of cleanup work after the plants and the construction of a natural gas-fired power plant, to replace the 220 megawatts of Colstrip-generated power that is used to supply Montana customers of NorthWestern Energy.

Even with that economic activity, the closure still would mean the loss of about 3,000 jobs statewide, $250 million a year in personal income, $60 million in state tax revenue and a decline in state population of 7,000 people by 2043, the study said.

Barkey said the study did not calculate the impacts of development of other specific power projects beyond the natural-gas plant.

Hedges, whose organization was a plaintiff in the lawsuit that led to the planned closure of Colstrip plants 1 and 2, said the newer Colstrip plants are nearly 40 years old, so it’s not unrealistic to think that they may close within the next decade.

However, she said the study is wrong to say that other power generated by wind, solar or hydro projects is going to be more expensive than Colstrip-generated power. She said consumers will benefit as they migrate to that cheaper power.

Insisting that Colstrip should stay open is saddling customers with higher costs in the long run, Hedges said.

“There will absolutely be negative economic aspects (of closing Colstrip), but there will also be positive economic impacts,” she said. “You can’t look at that in a vacuum.”