Washington Aims To Phase-Out Montana Coal-By-Wire, But Coal Will Persist

"We need to make sure Washington utility consumers are protected against economic shocks.'

Washington Aims To Phase-Out Montana Coal-By-Wire, But Coal Will Persist
Under a bill awaiting Gov. Jay Inslee's signature, Puget Sound Energy would be able to set aside federal tax credits to pay for the eventual shutdown and clean-up of two older coal-by-wire units at the facility in Colstrip, Montana (above). Photo: P.Primo

Awaiting the signature of Washington Governor Jay Inslee is a bill to create a special fund for the eventual shut-down and clean-up of the older two of four coal-fired electric power plant units in Colstrip, Montana.

Puget Sound Energy owns half of the two older units, called Colstrip 1 and 2. Under SB 6248, PSE will be able to put into a special fund for the closure of the units approximately $300 million in federal tax credits which were originally awarded for hydropower and wind-power projects and which would otherwise go back to ratepayers. Colstrip units 3 and 4 are newer and cleaner. They are expected to operate into the 2030s.

In Or After 2023

The envisioned shutdown of units 1 and 2 could occur sometime in or after 2023. A provision of the bill does allow PSE to petition the Washington Utilities and Transportation Commission for permission to use the special fund to retire Colstrip 1 and 2 before 2023 if the utility can show it’s necessary for economic or technological reasons or because of actions of a business partner.

Oregon legislators also recently passed a measure to move off coal-powered electricity from all producing units, including Colstrip 3 and 4, by 2030 or 2035.

No Commitment Yet From Governor To Sign The Bill

Inslee has until April 1 to sign or veto the bill and his office is not saying which he will do.

However, Inslee spokeswoman Jamie Smith did emphasize that when the Governor signed his Carbon Pollution Executive Order in April 2014, that “shutting down coal-by-wire,” or coal-powered electricity, was one key component.

Smith added, “The transition away from coal to cleaner energy has been a significant part” of the Governor’s energy agenda.

For PSE, the handwriting is on the wall. The investor-owned utility serves 1.1 million Washington customers and while roughly one-quarter of its base load comes from Colstrip, it knows it must begin planning to come off its remaining reliance on coal.

The trick is to do it in an orderly way and with sound financial planning, PSE’s General Counsel Steve Secrist recently testified to the Washington House Committee on Technology and Economic Development.

Facing Facts

The growth of environmental laws is not slowing down, it’s picking up, and Colstrip Units 1 and 2 are 1970s vintage, so getting ready for the inevitable de-commissioning makes much more sense than “dragging your heels and waiting for it to come to you,” Secrist told lawmakers in urging their support for the bill.

“We’re looking at the reality of Colstrip, at the fact that there is a life-end out there, at some point in time….We think it is incumbent upon us…to…minimize the ultimate costs to our customers,” Secrist said.

State Sen. Doug Ericksen (R-42), a co-sponsor of SB 6248, emphasized the bill will not lead to any immediate shut-down of Colstrip units 1 and 2, a point of concern for Montana officials and workers.

“All energy facilities have a life expectancy, but if federal rules force a premature closure of these two older plants, we need to make sure Washington utility consumers are protected against economic shocks,” Ericksen said.

The federal Clean Power Plan could still provide such an impetus, although the emerging rule was slowed down in February when the U.S. Supreme Court put it on hold.

Also potentially limiting the tenure of Colstrip 1 and 2 is an EPA rule requiring states to reduce their regional haze and carbon footprint, although it too suffered a blow in court recently and will likewise have to be reformulated.

In addition, the Sierra Club has ongoing legal actions to attempt to shut down the older Colstrip units.

Competition From Natural Gas

Another and perhaps more immediate threat to coal-powered electricity facilities like Colstrip is free-market competition from cheaper and cleaner natural gas, which is also used by utilities and homeowners to yield electricity.

Nonetheless, coal may continue to have a significant presence in the Pacific Northwest due to its popularity as an export to Asia, even as it becomes less and less a part of our own power source mix.

Said Herb Krohn, Washington Director of the International Association of Sheet Metal, Air, Rail and Transportation Workers Union, Transportation Division, “Coal is not a good product for energy generation at this time but it will be used to generate electricity for another 40 to 60 years or longer,” due to market demand in Asia, investments already made, and positive economic impacts.

Coal Brings Trade Benefits, Jobs, Says Union Leader

“The reality is, in the U.S., that one out of four railroad jobs and one out of five railroad revenue dollars is generated from the movement of coal. The Pacific Rim wants our U.S. coal because of its lower sulfur and mercury content,” Krohn added.

Powder River Basin coal from Wyoming “is among the cleanest,” and in Asia it gets mixed with dirtier coals to reduce overall emissions. If we don’t sell Asia our clean coal, nations there will produce more greenhouse gas emissions without it, Krohn said.

Nationally, a 2015 reference case projection from the U.S. Energy Department’s Energy Information Administration (EIA) has overall U.S. coal production rising modestly by 2040, not decreasing, from recent levels.

It grows from 1 billion short tons in 2012 to 1.1 billion by 2040. More U.S. coal, especially from Wyoming, might be headed to Northwest ports on trains for export to Asia, where allowed by states.

Longview Coal Expert Terminal Still At Issue

In Washington, there’s an unresolved controversy over permitting a planned coal export terminal in Longview. A draft environmental impact statement on the proposal is expected to be issued by the state’s Department of Ecology by April 30.

Although coal-by-wire may be on the way out, gradually, the U.S. appetite for coal is not projected to diminish, overall.

On total U.S. energy consumption, according to the EIA, coal holds its ground as the third most prevalent source from 2012 to 2040, trailing petroleum products and natural gas but continuing to outpace renewables.

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