Enviro groups do deal for 2022 retirement of two Colstrip coal units

The  Montana Environmental Information Center (MEIC) and Sierra Club said July 12 that they have reached a historic agreement with Puget Sound Energy and Talen Energy to retire by July 2022 the oldest coal-burning units at the Colstrip coal plant in Colstrip, Montana.

Units 1 and 2 – which were built in the 1970s – have faced serious problems remaining competitive as energy markets shift dramatically, the environmental groups said. Meanwhile, regulators in Washington and Oregon, which are the homes of the main customers for Colstrip’s electricity, have sent clear signals that they no longer want coal-generated power and prefer more clean energy. Under the agreement, which was filed with the U..S. District Court for the District of Montana, Talen and Seattle-based PSE have until July 2022 to retire the two units.

The environmental groups said these unit shutdowns mark an opportunity to use Colstrip’s existing transmission system to build out more clean energy and export it to Washington and other states. The American Wind Energy Association ranks Montana third for wind power potential in the United States, they noted.

Anne Hedges of the Montana Environmental Information Center said in a July 12 statement: “This agreement provides certainty for addressing grievous pollution issues and gives the two units six years to go offline, although the market may prove less tolerant of that length of time. Talen’s CEO recently said it will lose millions of dollars operating the plant this year alone. We need a plan for a different energy future. We can meet markets and customers’ demands, create jobs and take advantage of the existing transmission line if we are prepared.”

Mike Scott, the Sierra Club’s senior organizing representative in Montana, said: “Montana’s energy landscape is changing. We want to keep Montana competitive. We have the clean energy potential and a talented workforce to meet these changes head on. This is an opportunity to build clean energy right here at home so customers in Washington, Oregon, California and other states are running off of Montana made energy.:

The environmental groups noted that in March, Oregon Gov. Kate Brown signed legislation requiring the state to be completely coal-free by 2030 and to get 50% of its electricity from clean energy sources by 2040. Washington Gov. Jay Inslee also signed a law creating a funding mechanism specifically to help PSE pay for  the retirement and cleanup of Colstrip Units 1 and 2.

The Colstrip agreement stems from legal action that the Sierra Club and MEIC brought against the plant in 2013, alleging major violations of the Clean Air Act. The agreement also requires Talen and PSE to begin ramping down dangerous levels of sulfur and nitrogen pollution until closure to resolve ongoing air quality problems. Colstrip’s two newer units, built in the 1980s, are not covered by the agreement and will continue to run.

This settlement, lodged with the court, is subject to a 45-day review period by the U.S. Environmental Protection Agency and the U.S. Justice Department.

Puget Sound Energy says this deal avoids need for new air controls

Puget Sound Energy noted in a July 12 statement on the settlement that Colstrip Units 1 and 2 are becoming less economic as the price of natural gas has dropped and remained low.

“Our customers expect PSE to be good stewards of the environment and to keep energy costs reasonable. The eventual closure of Units 1 and 2 at Colstrip without the risk of further legal proceedings or additional significant investments in the units to meet regulatory requirements enables us to accomplish both of these goals,” said Kimberly Harris, PSE President and CEO.

PSE owns 50% of those two units, and independent power producer Talen Energy owns the other 50%. Talen, which is responsible for daily operations at Colstrip, has also agreed to the shutdown of Units 1 and 2. Altogether, there are six owners of the four units, and all six are part of the settlement with the Sierra Club.

The settlement does not impact Units 3 and 4 at Colstrip, PSE said. Those units are newer, have more capacity (about 1,500 MW of combined generation) and are more efficient. “Units 3 and 4 will remain as a productive part of our diverse generating portfolio, providing our customers reliable and efficient service and ensuring continued operations at Colstrip,” said PSE.

PSE said it believes this settlement is in the best interest of customers by avoiding the potential need for the installation of additional pollution control equipment for Units 1 and 2 due to future regulatory requirements. Also, there are increasing pressures on coal today, primarily from new and very inexpensive supplies of natural gas that can produce electricity more cheaply and with fewer emissions than coal. In addition to the changing economics of coal, there are shifting policies and regulations on the state and federal levels, including the U.S. Environmental Protection Agency’s regional haze plan and Clean Power Plan proposal to reduce greenhouse gas emissions from existing power plants.

The Colstrip plant operates 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. Units 3 and 4 each have about 740 MW of capacity. The plant employs about 360 people and is owned by Talen Energy, Puget Sound Energy, Portland General Electric, Avista Corp., PacifiCorp and NorthWestern Energy. The plant is supplied with minemouth coal produced at strip operations run by Westmoreland Coal.

Said the Westmoreland Coal website: “Western Energy Company–Rosebud Mine is a 25,000-acre surface mine complex located in the northern Powder River Basin near Colstrip, Montana, and the Northern Cheyenne Indian Reservation. Rosebud is a large operation with three active pits and supplies almost all of its current production to the four-unit 2,100 megawatt Colstrip Power Station that is adjacent to the mine and was specifically designed to burn Rosebud coal. Coal is sold to the Colstrip Station under two long-term contracts. Colstrip Station is one of the region’s most cost-efficient and cleanest power plants, which should help it maintain a base-load position on the electricity dispatch curve, and ensure continued strong demand for Rosebud coal. The Rosebud Mine produces approximately ten to thirteen million tons per year.”

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.