Coal, climate change clash in Colstrip

Editor's Note: This story published in the Great Falls Tribune Feb. 28, 2016. 

COLSTRIP, Mont. — Ashley Dennehy, 24, left this town of 2,300 to go to college, but coal and the quality of life it fuels brought her back.

Schools are great. A stone’s throw from the Yellowstone River, recreational opportunities abound. Then there’s the jobs.

Dennehy’s husband, a mechanical engineer at the Rosebud Coal Mine, earns more than $70,000 a year. That’s more than the state’s median household income of $46,230, according to the U.S. Census Bureau.

“Where are you going to find that?” said Dennehy, noting that the salary allowed the young couple to purchase a $135,000 home financed with a 15-year mortgage requiring a $1,000 monthly payment.

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Coal built this town on the Montana prairie, which is home to Colstrip Generating Station, the second largest coal-fired power plant west of the Mississippi River, as well as the 25,000-acre Rosebud Coal Mine that supplies the plant’s coal.

Now, on top of changing market conditions for coal, new federal regulations and state laws are under consideration to limit coal-fired power because of concerns over climate change. Residents are trying to put the brakes on efforts they say could bring down the city’s foundation and their future.

Combined, the power plant and mine employ 730 people who earn $80 million in annual compensation, and the power plant makes up 85 percent of the town’s property tax base and 77 percent of Rosebud County’s.

“Everything we have here depends on coal and the power plants and the mine,” said Joe Novasio, who worked at the Rosebud mine for 39 years, retiring as maintenance manager.

Colstrip has the third largest municipal property tax base in Montana, behind only the state’s largest city, Billings, which has more than 100,000 residents, and Missoula, population 70,000, according to the Southeastern Montana Development Corp.

Residents get free memberships in a city-run health club and nine-hole golf course.

All thanks to coal.

Burning coal also emitted 16 million tons of carbon dioxide in 2014 from four stacks at Colstrip Generating Station that tower over the wide-open landscape of eastern Montana.

That’s the most in Montana, according to the state Department of Environmental Quality, and the EPA says the plant’s annual emissions have ranked between eight and 16 in the nation since 2010.

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“People are concerned about climate change, and they want to see a transition to cleaner energy,” said Anne Hedges of the Montana Environmental Information Center, which monitors state and federal water and air quality protection laws at the power plant. “Nobody expects that to happen overnight, but they do expect it to happen.”

Coal ash disposal ponds at the power plant also have caused groundwater contamination. The DEQ is now working with Talen Energy, which operates the four generating units and has a 50 percent ownership interest in Unit 1 and Unit 2, to identify the extent of the pollution and potential remedies.

“And the more waste you put into that system the more expensive it’s going to be in the long run,” Hedges said.

Legislation that passed the Washington state Senate last week would give Puget Sound Energy, which has 1.1 million Washington customers, a mechanism to decommission the two oldest units at the power plant — should new federal clean air mandates make that necessary.

Puget Sound is one of the owners of the power plant.

That’s the most immediate concern for Colstrip residents.

“Big impact,” Colstrip Mayor John Williams, who’s also chairman of the Montana Coal Board, said of the possible closing of Unit 1 and Unit 2.

A few hundred of the 730 jobs at the mine and plant could be lost from a shutdown of the two older units, Colstrip officials say.

The Washington legislation provides a “thoughtful pathway forward” and doesn’t call for the closure of the two units overnight, Hedges said.

The first compliance deadline for states to meet the Environmental Protection Agency’s Clean Power Plan, another concern for the community, is 2022, Hedges added.

The Clean Power Plan, which would go into full effect in 2030, requires states to come up with plans to limit emissions from coal-fired power plants, which the EPA says are the largest source of U.S. carbon emissions and contribute to climate change. Montana faces the biggest reduction in carbon emissions in the nation under the EPA’s Clean Power Plan.

Earlier this month, the U.S. Supreme Court placed a stay on the plan until the U.S. Court of Appeals for the D.C. Circuit rules on its legality.

State Sen. Duane Ankney, a Republican representing Colstrip, calls the Clean Power Plan and the Washington legislation a “war on Montana,” even if the proponents claim their aim is to reduce carbon emissions.

“It’s absolutely a war on middle class America,” Ankney said.

The good-paying jobs at the mine and plant, he said, provide opportunities for young people to stay in Big Sky Country.

Washington legislation is moving too fast, Ankney said, without dialogue with Montana representatives and the industrial customers served by the Colstrip power plant, including several from Great Falls.

“This was all done in a void,” Ankney said.

There may be other parties interested in purchasing Unit 1 and Unit 2, he said. And discussion is needed on technology that could be employed to keep the plants running longer, Ankney said.

Unit 1 at the power plant was completed in 1975, and Unit 2 in 1976.

The original environmental impact study predicted a life span for those units of 30 years with alternate energy sources emerging as economics dictate.

“Times are changing,” MEIC’s Hedges said. “They would be better off planning for the future than letting the future happen to them without being involved in how that occurs.”

The transmission line that delivers Colstrip-made power “is gold in this state,” she adds, and the community could have a future in a clean-energy economy.

Residents are defending the natural resource that made the town the unofficial energy capital of Montana.

“We are basically fighting back,” said Dennehy, who manages a hardware store and hopes to raise her family here.

Lori Shaw, also 24, who owns a pet care store, came up with the idea to launch a Facebook page called Colstrip United. She’d tired of what she calls misinformation being spread about the town and coal. Social media is one way to counter those who “seek to destroy us,” Dennehy said. Although it was meant to rally Colstrip residents, Shaw said, the Facebook page has attracted people from across the country and even the world.

“To say they’re outdated and have run their life is false information,” Williams, the mayor, said of the plant’s coal-fired units.

Closing the two units would have a disastrous effect on the property tax base and cause population loss that would be felt in the public school system, he said.

And homes in Colstrip already have stopped selling because of the uncertainty surrounding the power plant, Williams said. Williams’ own home has been on the market for almost two years.

Colstrip is located on the northern edge of the Powder River Basin, an area in Wyoming and Montana known for its coal deposits, midway between Seattle and Minneapolis.

John Tauscher, 62 who is retired from the plant, said Colstrip provides reliable, low-cost power, and emissions are not what opponents make them out to be.

“You just have to look outside,” Tauscher said. “That snow is whiter than my pickup, and I have a white pickup.”

About 90 percent of the coal mined in Montana is either exported to be consumed outside of Montana, or exported “by wire,” meaning the coal is burned at coal-fired power plants such as Colstrip Generating Station with the electricity delivered by transmission line to customers in other states, according to the U.S. Energy Administration.

A new report released last week called “Planning for Montana’s Energy Transition” said the state as a whole is likely to experience relatively small effects from changes in the coal industry, with the state less dependent on coal than at any time since the 1970s.

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However, it adds that coal-dependent communities in eastern Montana are likely to feel “the acute effects of job losses and declining tax revenue in the coming decades” resulting from a permanent structural shift in the coal industry.

“We can’t forget there are still places very reliant on natural resources,” said Mark Haggerty, a policy analyst for Headwaters Economics, a research group based Bozeman that studies economic issues in the West.

Another report considers the situation more dire.

A study by the University of Montana’s Bureau of Business and Economic Research, commissioned by NorthWestern Energy, one of five owners of the power plant, predicted implementation of the Clean Power Plan could result in the most significant economic event to occur in Montana in more than 30 years.

That includes the loss of 7,100 regular and contractor jobs at the power plant, plus the neighboring mine and local government jobs supported by the significant property tax bills those facilities pay.

Environmental groups point out that the study was commissioned by NorthWestern Energy, one of the owners of the Colstrip power plant.

One suggestion in the Headwaters study is using federal coal mining royalties currently earmarked for the state’s general fund ($20 million annually) to address the effects that coal-dependent communities will bear as a result of the nation’s push for cleaner energy.

The state needs to begin planning for the uneven impacts and opportunities that are likely to arise from a shift away from coal, Haggerty added.

“It’s unlikely those wind farms are going to be located inside the city limits of Colstrip,” Haggerty said.

The legislation in Washington state may be the most immediate threat to the community, Haggerty said.

The bigger picture is that coal production in the United States is declining in response to cheap natural gas, changing consumer demand, new environmental regulations and weak coal export markets, the Headwaters report says.

That suggests larger structural changes in domestic and global energy markets, which will affect both power generation and mining in Montana for decades, he said.

Chuck Denowh of Count on Coal Montana said the biggest threats to coal are political.

"It's not a shift in the market, so much as we're seeing all these regulations," Denowh said. "It's political forces that are having the effect. That means we have a choice whether we want to go down that road or not."

A broader discussion is in order on how to replace lost coal power generation, including the 614 megawatts being produced now at the Colstrip power plant’s two older units, Haggerty said.

“We’re not saying this because were biased against coal,” Haggerty said. “We’re saying this because this is what the EIA (U.S. Energy Information Agency) and market analysts are saying, and we think it’s important for Montana to understand those trends and be able to prepare for them.”

For Colstrip, the issue is complicated by a coal-fired power plant owned by multiple entities based in different states that are subject to new federal rules on air quality.

“We’re separated by political boundaries, but the electric cables run between our states so we’re connected by those,” said Doug Ericksen, the Republican chairman of the Washington Senate Energy, Environment and Telecommunications Committee.

Ericksen is the sponsor of legislation that has Colstrip residents concerned about a major economic hit, and he knows they’re worried.

“We don’t want to turn this into a feud between states,” Ericksen said.

Puget Sound, Portland General Electric, Avista Corp., PacifiCorp, NorthWestern Energy and Talen Energy, which also operates the power plant, have varying percentages of ownership in Colstrip Generating Station’s four generating units.

If federal air quality rules force a premature closure of Colstrip’s two older plants, it could cause economic shock to Washington ratepayers, and the legislation would be a safeguard, Ericksen said.

The Washington state bill would not specifically eliminate any coal-fired power plant or establish a schedule for a shutdown, and does not affect continued operation of the newer, cleaner and larger Unit 3 and Unit 4, Ericksen emphasized.

But it will give Puget Sound a mechanism, via federal tax credits, to finance closure and cleanup of the two older plants, if necessary. Senate Bill 6248 passed the Senate 42-7 and now awaits action in the House.

“We have been working very hard for the last two sessions to craft a solution that works for both states,” Ericksen said.

Besides the Washington legislation and the Clean Power Plan, a bill before Oregon lawmakers would ban Portland General Electric and PacifiCorp from using coal-fired power after 2035.

Ankney, the state senator, came to Colstrip in 1972 to work on construction of the power plant and stayed to work at the coal mine for 28 years. Many people came to town to work in coal-related jobs and ended up staying for the quality of life, he said.

“There was nothing here,” Novasio said.

Northern Pacific Railway established Colstrip in 1924 to provide coal for steam locomotives.

In 1958, the railroad switched to using diesel locomotives and the mine was shut down, but in 1959, Montana Power Co. purchased the mine and the town and the coal reserves were tapped for four power generating units that were constructed in the 1970s and 1980s.

Western Energy Co. purchased the original townsite of Colstrip in 1968, and the official plat of the townsite and the community of Colstrip was dedicated in July 1975. The community was officially incorporated as a municipality in 1999 following the deregulation of the power industry in Montana. The four power plants were situated inside the city’s boundary, allowing the city to reap the property tax benefits.

Now Ankney is leading the charge to keep coal viable. He and other lawmakers traveled to Washington to testify on the legislation before Ericksen’s committee.

The states of Washington and Oregon were some of the biggest proponents of building the power plants in the 1970s, said Hugh Broadus, a rancher and farmer whose operation includes land that’s been reclaimed at the Rosebud Mine.

If they want to walk away now, they should buy every house in Colstrip and pay a living wage to the employees until they retire, he says.

“Because that’s what they’re taking away,” Broadus said.

If the units are shut down, Montana will be short of megawatts, leaving an imbalance on the grid, Ankney said. That shortfall will need to be addressed with additional power, perhaps from natural gas, which would require construction of new pipelines, he said. Ankney noted that several businesses and public agencies in Great Falls get power from Colstrip, including the city, the city’s public schools and Calumet Montana Refining.

The plant’s four units generate enough power to serve 1.5 million homes, said Todd Martin, a spokesman for Talen Energy, which operates the units and also has a 50 percent interest in units 1 and 2.

He wouldn’t comment on the possible closure of Unit 1 and Unit 2.

“Honestly, there’s been a great deal of rumor and a great deal of speculation and Talen Energy cannot and will not speculate on the future,” Martin said.

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Dave Massey said he came to Colstrip in 1979 and went to work building a community, along with others who decided to make a go of it here.

Power and coal produced in Colstrip powered the West, he said. Now, Massey said, he feels discarded — the same way he felt following his service in the Vietnam War.

“I wanted to die here,” Massey said. “But it’s not looking like it’s going to be possible.”

Coal production

The state’s coal production increased dramatically in the 1970s in response to U.S. demand, growing from 8 million tons in 1973 to nearly 33 million tons annually by 1980. Production has hovered around 40 million tons annually since the mid-1990s.

Coal mining jobs

Big Horn County: 709 (30 percent of workforce)

Musselshell County: 186 (20 percent of workforce)

Richland County: 15 jobs.

Rosebud County: 343 jobs (14 percent of workforce).

*2013 figures

Coal burning jobs

Big Horn County: 30

Richland County: 54

Rosebud County: 388 (16 percent of workforce)

Yellowstone County: 320

*2013 figures

Colstrip Power Plant CO2 emissions

2010: 17.1 metric tons, 8th in nation

2011: 14 metric tons: 16th in nation

2012: 13.4 metric tons: 15th in nation

2013: 13.6 metric tons: 14th in nation

2014: 14.9 metric tons: 11th in nation

Sources: EPA, Headwaters Economics, Energy Information Administration