In an April 5 letter, Montana Gov. Steve Bullock offered to work with NorthWestern Energy CEO Bob Rowe to explore alternative ownership of the coal-fired Colstrip Units 1, 2 and 3 through a working group convened by the state.
The letter follows up on a public comment made by the CEO in which he expressed potential interest in the transfer. The governor said he has also had conversations Talen Montana and Puget Sound Energy, the current joint owners of Colstrip Units 1 and 2 and a portion of Unit 3, and both companies are willing to participate in the working group.
Working together to craft a Montana-made energy future necessarily includes a discussion regarding Colstrip and options for the future of those plants and the transmission lines connected to them.
“I am concerned about the community, workers, and the valued electricity that is provided by those facilities, both for in-state consumption by Montanans and for export to our neighbors,” said Bullock. “And as we take a focused look on options for Colstrip’s future, we will also continue our efforts to develop other aspects of Montana’s energy portfolio and take advantage of our other abundant opportunities to create more good-paying jobs for Montana families in the renewable energy sector.”
In referring to Rowe’s comments, the governor cited an April 5 article in the Billings Gazette that said there has been talks for weeks about the potential closure of Units 1 and 2 of the Colstrip power plant and how that would affect the oil refineries, silicon plants and mining companies that buy electricity directly from those units. The article said that actions by the two units’ current owners, Talen Energy and Puget Sound Energy, suggest both want out of those units.
The article said Montana Public Service Commissioner Travis Kavulla asked Rowe if he sees any possibility for a deal to be done where NorthWestern, or another utility, takes those units and has some kind of arrangement to sell that production, either in a regulated manner, or an unregulated manner to wholesale customers. The exchange came during the final day of the Montana Energy conference in Billings, which had a heavy focus on the impacts of the federal Clean Power Plan, which would reduce CO2 emissions and is under legal appeal, on the Montana power sector.
“It’s certainly possible, given strategies the state could pursue if the industrial customers taking power were supporting it, Legislature were supporting it, the commission were supporting it,” Rowe responded. “There are strategies that would allow a party, that could be us, could be someone else, to step into the role that Talen now plays. But it is very inconsistent with the risk profile that we have and we think our customers want us to have. There are lots of risks that would have to be addressed.”
NorthWestern already owns a 30% share of Colstrip Unit 4, but this power is solely for its regulated customers, not for the merchant market. Puget Sound Energy uses its share of the plant output for regulated customers, while Talen Montana, part of Talen Energy (NYSE: TLN), is a merchant generator.
The Colstrip power plant, located east of Billings, has four coal-fired units capable of producing up to 2,094 MW. Units 1 and 2 began commercial operation in 1975 and 1976, and Units 3 and 4 started in 1984 and 1986.
Units 1 and 2 each have about 307 MW of capacity. Talen Energy has 50& ownership of each. Units 3 and 4 each have about 740 MW capacity. Talen Energy has 30% ownership in Unit 3 and no ownership in Unit 4. Talen Energy’s share in the plant’s total generating capacity is 529 MW. Puget Sound Energy holds 50% of Units 1 and 2 and 25% of Units 3 and 4.
The plant is owned by Talen Energy, Puget Sound Energy, Portland General Electric, Avista Corp., PacifiCorp and NorthWestern Energy. The plant takes minemouth coal from a Westmoreland Coal mine.