Sierra Club lights into Puget Sound Energy for retaining Colstrip

Puget Sound Energy (PSE) says its 677 MW (net) stake in the Colstrip coal plant in Montana is the most economic choice for now, with the Sierra Club claiming that this is a false economy and that PSE should exit the plant.

“PSE is the largest owner of the outdated, dirty coal plant in Colstrip, Montana and generates about 30 percent of its electricity from the plant and other increasingly-expensive coal sources,” said the Sierra Club in a May 30 statement about PSE’s final 2013 integrated resource plan (IRP), which retains Colstrip as a long-term resource.

Calling on PSE to invest in clean energy solutions and in Washington communities, the Sierra Club said it and community partners barged an inflatable coal plant with a sign reading “PLEASE PSE, RETIRE COAL. INVEST IN CLEAN ENERGY” surrounded by “Clean Energy” kayaks. This was a backdrop to a May 30 press conference where local leaders and concerned residents spoke out against the utility’s continued practice of burning coal to power Washington.

“While PSE supports many clean-energy programs, it also owns the largest, most polluting coal-fired power plant in the Northwest,” said Doug Howell of the Sierra Club. “Right now, PSE has a momentous opportunity to invest in clean energy and create good jobs in Washington State by moving beyond coal. Instead of continuing to rely on this toxic fossil fuel, which harms people’s health and the environment, it’s time for PSE to completely replace coal with cleaner forms of energy.”

More than 150 coal plants across the country, including TransAlta’s Centralia plant in Washington state and Portland General Electric’s Boardman plant in Oregon, are on a path to retirement as the U.S. moves away from its reliance on coal, the club noted. This has opened up the doors to a flood of clean-energy investment and a new era of healthy air and clean power, it added.

Activists urged local residents to make sure their voices are heard by sending comments to the Washington Utilities and Transportation Commission to call for another assessment of costs for PSE’s coal consumption. The public comment process commenced with the release of this final IRP.

Puget Sound Energy says dumping Colstrip would mean a 5% rate hike

There is long-term uncertainty for coal generation in general, but Colstrip reduces cost and market risk in most likely scenarios, PSE said in the final IRP. PSE developed four environmental compliance cost cases to test the economic viability of Colstrip under a variety of potential regulatory requirements. Overall, the analysis found that Colstrip reduces cost and market risk for customers. Three key risk factors have the greatest effect on Colstrip’s performance as an economic, least-cost resource: very high CO2 costs, very high disposal costs for coal combustion residuals, and very low natural gas prices for a very long time.

“At this time, the analysis indicates that continuing current operations at Colstrip saves PSE customers about $131 million per year,” the final IRP said. “Put a different way, replacing Colstrip with another resource would result in approximately a 5 percent annual rate increase, apart from any other rate pressures. Conditions may change in the future, but for this planning cycle, it does not appear PSE should begin developing resources to replace Colstrip.”

The Colstrip plant consists of four coal-fired steam units located in eastern Montana about 120 miles southeast of Billings. It takes minemouth, Powder River Basin coal from a unit of Westmoreland Coal. The plant was built in two phases.

  • Units 1 and 2 began operation in 1975 and 1976, respectively. Each produces up to 307 MW net. PSE and PPL Montana each own a 50% undivided interest in both units.
  • Units 3 and 4 began operation in 1984 and 1986, respectively. Each produces up to 740 MW net. Six companies participate in the ownership of Units 3 and 4. PSE owns 25% each of Units 3 and 4, Portland General Electric owns 20% of both units, Avista owns 15% of both units and PacifiCorp owns 10% of both. PPL Montana owns 30% of Unit 3 and NorthWestern Energy owns 30% of Unit 4.

Colstrip faces various environmental pressures

During the next five years, the Colstrip units will become subject to several recently enacted regulations, changes in existing regulations and a proposed rule governing coal combustion residuals (CCR), the final IRP noted. For Colstrip, CCR includes flyash, bottom ash and scrubber slurry.

The Mercury and Air Toxics Standards (MATS) governs emissions of mercury, acid gases and heavy metals. Particulate matter (PM) emissions may be used as a surrogate for heavy metal emissions. Compliance is required by April 2015. The mercury control system installed at Colstrip to meet a previous Montana mercury rule will also meet the MATS requirements for mercury capture and removal. The existing scrubbers on all four units adequately remove acid gases covered by the rule. Some investments for extra PM control by the Unit 1 and 2 scrubbers are anticipated in the environmental compliance cost cases developed for the IRP to comply with the heavy metals requirements of MATS. The Units 3 and 4 scrubbers already remove the required level of PM.

The Regional Haze Rule, adopted in 1998, has some potential impact on Colstrip. Major emissions sources that began construction before 1977 (this includes Colstrip Units 1 and 2) must also bring emission controls to Best Available Retrofit Technology (BART) standards during the initial review cycle. “Reasonable Progress” requirements call for an updated analysis of impacts every five years. The state of Montana declined to prepare the necessary studies, so the requirement defaulted to the U.S. Environmental Protection Agency. The EPA published its Final Implementation Plan (EPA FIP) for Colstrip, covering both the BART and Reasonable Progress requirements, in September 2012 with implementation required within five years. The EPA FIP requirements have been appealed to the U.S. Court of Appeals for the 9th Circuit.

With the Coal Combustion Residuals (CCR) rule, in 2010 the EPA published proposed revisions to the Resource and Conservation Recovery Act (RCRA) for the handling and permanent disposal of coal combustion residuals: bottom ash, flyash, scrubber slurry and boiler slag. The proposed EPA rule considered three options.

  • Subtitle C “Special Waste” Option – Designate CCR as a “special waste” under RCRA Subtitle C (Hazardous Wastes) requirements. This would include the phase out of impoundments within five years.
  • Subtitle D Option – Composite liners required for all existing and future CCR impoundments and for new landfills. State regulations would continue to apply to the construction and operation of existing CCR storage facilities. EPA would develop minimum standards for state rules governing CCR disposal and maintain oversight authority. There would be no new regulatory controls for any CCR landfills and impoundments that closed before the effective date. Also, all new surface impoundments and existing facilities that continued to operate would need to have composite liners within five years of the effective date.
  • Subtitle “D prime” Option – Composite liners required only for new impoundments and landfills. This approach would be the same as the Subtitle D option above, except that existing impoundments would not be required to retrofit and install a composite liner, or close.

The EPA has not announced when it expects to issue the final rule or its effective date, the final IRP noted. The EPA reviewed CCR toxicity to identify any hazardous characteristics in 1993 and most recently in 2000. In both instances EPA determined that CCRs were not hazardous, and should not be regulated as a Hazardous Waste under Subtitle C, the final IRP pointed out.

The 2010 proposed rule was triggered in part by the failure of an ash impoundment dam at the Kingston power plant operated by the Tennessee Valley Authority. After that event, the IRP noted that the EPA examined Colstrip’s ash management practices and the integrity of the dams and abutments at the facility’s ponds; no changes in design or management were requested or required.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.