Washington state bill could shut down Colstrip

HELENA – Will the people of Washington be as gung-ho to "go green" if they, and not Montanans, bear the costs of turning away from coal energy?

A Montana legislator thinks the answer is no.

Sen. Duane Ankney, R-Colstrip, plans to introduce a bill that would force Washington ratepayers to absorb the "big hole" in the budgets of Montana schools, state and county governments that he predicts would result from a bill before the Washington Legislature that could devastate Colstrip.

Washington's Senate Bill 5874 would enable Puget Sound Energy to buy out other owners of the Colstrip plan with the promise it would close the plant.

"This bill is a shot across the bow," Ankney said. He's responding with a bill of his own, expected in early April.

"What it does is put the impacts back on Washington," he said. "They have a philosophy they don't like burning coal. Well, they're going to pay for it."

Puget Sound Energy, based in Bellevue, Wash., is the largest owner of Colstrip, which has four coal-fired units. PPL Montana operates the plant, on behalf of six owners, including Avista and PacifiCorp of Washington.

The Washington bill's "state coal generation retirement program" gives utilities the tools they need to begin divesting from coal power plants, including a way for the utility to issue bonds for shutdown and other costs that would be paid back by ratepayers over time, according to supporters.

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"It's important that we start the discussion about how to divest ourselves of energy supply from coal," said Rep. Jeff Morris, D-Mount Vernon, prime sponsor of HB 2002. "This is not a plant-closing bill. It's just a process to set up the opportunity to close the plant."

The bill would allow utilities to recover any mitigation costs from a plant closure, such as financial assistance to displaced employees, from its utility customers.

Washington's bill, at least as it began, was an "appalling giveaway to a utility company" because it incentivized it to buy not the cheapest energy but instead energy that wasn't coal — and guaranteed they could pass the costs on to ratepayers, said Travis Kavula of the Montana Public Service Commission. The PSC sent a letter to Washington lawmakers objecting to the bill.

"It removed the incentive for Puget Sound Energy to operate Coalstrip, even if that was the least costly," he said. He said amendments may completely change the nature of the bill as it progresses in Washington.

"I don't think it's going to end up looking anything like it began," he said.

Shutting down Colstrip could mean "serious transmission reliability issues," he added.

Kavula would like to see regional discussions on energy issues instead of one state legislating something that will impact another so markedly.

"The best approach is to hit the pause button on this," he said.

Washington state gets less than 14 percent of its power from coal. Much of the state's coal-fired electricity comes into the state from Colstrip and the Jim Bridger plant in Wyoming.

The bill is expected to come before the Washington Senate on Wednesday.

So far the bill's fiscal note suggests a "nonzero but indeterminate cost."

How about $12 million in wages for 165 plant workers and another $12 million for 150 coal miners' wages? Ankney said. How about the wages of 1,500 vendors and $4 million for unionized seasonal employees? How about the millions going to schools, state and county governments?

That's just counting shutting down Colstrip's units one and two, which Ankney said he believes would be the extent of the effect of the effects of the bill.

"We're talking about a substantial amount of money," he said.

If Colstrip is going to be retired over the course of 20 years, that should be 20 years in which Washington pays to make up the difference, he said.

Washington Sen. Kevin Ranker, D-Orcas Island, said if the cost of coal goes up because of such a bill, "I would say we don't want any more coal from Montana. All that would do is phase us out sooner."

He's sponsoring the bill in the Washington Senate and said it's a priority to wean the state off "coal by wire."

"I hope it doesn't get into dueling bills," he said. "I have to listen to my constituents first and they have been very clear they want clean energy. I don't want to impact rates in my state either, and I'm concerned about regional impacts."

He said he's aware the measure would have a significant impact in Montana and wants to address it.

The University of Montana found in 2010 that Colstrip has a $104 million-a-year impact on state and local tax collection.

Because of Colstrip's complicated ownership structure, no single owner can unilaterally decide to retire a plant. A provision in the bills sets up favorable conditions so that one utility could buy out another share of the coal plant with the goal of ultimately shutting it down.

There's an opportunity for Puget to acquire an additional interest in Colstrip, PSE's Ken Johnson told lawmakers at a Washington Senate committee hearing. "We believe it's in the best interests of customers to do that."

Johnson noted there are existing federal regulations around air quality that will make it more economically challenging to operate Colstrip. Units 1 and 2 of the Colstrip Steam Electric Station, valued in 2013 at negative $127.5 million.

John Rothlin with Spokane-based Avista Corp., told Washington senators that Colstrip is a source of cheap, reliable energy and it remains a cost-effective resource for the next 20 years. Avista, which was involved with the other utilities in drafting the bill, gets about 9 percent of its energy from Colstrip. He said Colstrip plant's future has major implications for Montana's tax base and the plant's workers.

Sen. Jim Honeyford, R-Sunnyside, also worried about the impact on Montana, asking: "Do we have a moral responsibility for the jobs lost and the economic impact on Montana?"

Ankney said he's been contacted by only one Washington lawmaker asking about the bill's impact in Montana.

"It's a decision being made in a void — a philosophical decision pushed by people not thinking about the human aspect or what it's going to do to Montana," he said.

"They say there are plenty of other jobs in Montana. That may be true, but they're certainly not paying $30 an hour plus benefits," Ankney said. "You're talking about the highest paid jobs in our state, jobs where you can get retirement, pay for your kids' schooling."

The plants work every year to cut down pollution and are in the top half for cleanest in the country, he said.

"This is a failure on our part, and of the industry's, not doing enough public education," Ankney said. "We're not tearing up the earth or killing your babies or blackening your skies."

Colstrip has touched many lives in Montana since it was built in the 1970s and 1980s in response to the era's energy crisis, he said.

"I hear all the time, 'My dad worked in those plants and it was the best-paying job he ever had,'" Ankney said. "So many people are connected with Colstrip and none will say it was a filthy, dirty job."

Gov. Steve Bullock said he understands climate change is serious but has grave concerns about Washington taking actions that have significant potential economic consequences for Montana "on a matter that will require action on a much larger scale to be successful."

Colstrip supports 700 employees directly and nearly 3,700 indirectly — a $600 million impact to Montana's economy, Bullock wrote in a letter to the Washington Senate Energy, Environmental and Telecommunications Committee, which moved the bill forward in February.

Washington should look at better transmission capacity to harness the wind power Montana could generate, with the state able to "provide new renewable energy to Washington state, and the associated jobs and tax revenues would significantly boost our economy. At the same time, we can explore the creation of other market opportunities for Colstrip power," Bullock wrote.

"In addition, there are significant liability issues associated with plant closure, and the state of Montana fully intends to make sure those issues are addressed," he added.

The Sierra Club is pushing the Washington bill as part of its "Beyond Coal" campaign. The environmental group attributes to Colstrip "as much carbon pollution as half of all passenger cars in Washington."

Bill Arthur, deputy campaign manager for the Beyond Coal campaign, said Monday that the group doesn't have a specific deadline in mind for Colstrip and expects that regulations will likely shutter Colstrip Units 1 and 2 "in the next four to five years" anyway.

Washington's only coal-fired power plant, in Centralia, is slated to shut down by 2025. Arthur said transiting the plant to retirement taught that "one shouldn't prejudge what might be most important for the community" as it moves away from supplying coal energy.

"That is a conversation they need to be part of," he said.

The Washington bill has undergone multiple drafts and is "still in the process of being negotiated in terms of what the numbers look like," Arthur added. "We're hopeful a package can be put together" with a timeframe and a process for remediation and transition. No one believes Colstrip will have as long as a 30-year plan first proposed in the bill, he said.

Jessica Finn Coven, Washington's state director of Climate Solutions, a non-profit based in Washington working with the Sierra Club, said in a release that Colstrip workers and community should be treated "with fairness while retiring the polluting Montana coal plant and replacing it with clean, renewable energy. Colstrip's impacts on global warming and community health require us to take action now, not delay another decade or two."

Reach Tribune Staff Writer Kristen Inbody at kinbody@greatfallstribune.com. Follow her on Twitter at @GFTrib_KInbody.