Three owners of Montana’s much-discussed Colstrip coal-fired power plant sat down with Gov. Steve Bullock in Helena on Wednesday to start talking about what happens to the aging power plant as forces seem to push the eventual closure of its two older units.
Kimberly Harris, CEO of Puget Sound Energy in Washington; Paul Farr, CEO of Pennsylvania-based Talen Energy; and Bob Rowe, CEO of NorthWestern Energy discussed the future of the plant, which sits about two hours east of Billings.
The ownership picture in Colstrip is complex. Six companies have a stake in the plant. Talen owns 50 percent of Units 1 and 2, a 30 percent share of Unit 3 and also operates the entire four-unit Colstrip complex. The plant and the town that exists mostly because of it and a nearby coal mine face challenges from laws passed in Washington and Oregon to push utilities based in those states with ownership in Colstrip to drop coal from their portfolio. The market is also favoring the low price of natural gas.
Farr said Talen, which spun off PPL Montana when that entity sold its hydropower production to NorthWestern Energy a few years ago, is looking at looking at its departure from a state where it now owns a very narrow portfolio.
Farr said Talen is willing to look at a path to transition ownership and will be as constructive as it can be, but there are other forces at work.
“We are under time and cost pressures,” he said. “I’ll lose millions in terms of operating Colstrip through the balance of the year.” Talen, unlike NorthWestern, is a merchant provider and not a regulated utility, meaning it cannot pass its expenses on to regulated customers for an above-market cost.
Puget Sound Energy has been involved in Colstrip since the plant was built about 40 years ago, Harris said. Washington state's Legislature earlier this year passed a bill that gives Puget a way to get out of its ownership in the older 1 and 2 units at Colstrip and also provides money for decommissioning costs.
"We've been at Colstrip from the start," she said. "We've been operating in Colstrip and contributing to the welfare of that community for the last 40 years. We continue to remain committed to that community today."
Bullock focused on who would provide power to large industrial customers like Montana Resources’ mine in Butte, who have long benefited from lower prices because they didn’t have to pay high transmission fees from far-away plants.
Right now Talen serves between 225-250 megawatts of the 300-350 those customers need, and Farr said if groups of those customers could sign a contract to guarantee enough revenue to cover costs, that would make providing that energy in the future more feasible for whoever is an owner at Colstrip. Power from the plant is also attractive to industrial customers because it's extremely reliable, he said.
Colstrip plays a role, though not a large one, in the electricity NorthWestern Energy provides to Montana consumers, Rowe said. The utility's largest assets are the hydroelectric dams purchased from PPL in 2009. The utility also gets more electricity from its wind generation than Colstrip.
What the plant offers NorthWestern is a reliable backup for high-demand periods. "What Colstrip does ... is provide us with pretty much 24/7 availability," Rowe said. "That's why our interest in Colstrip matters."
Lower natural gas costs are part of why coal power is less in demand, though Farr said he worries about what happens when those prices rise again and coal plants shut down.
"What happens when gas goes to $4? That doubles the fuel cost, and if you don't have that coal-fired generation capability, if you can't turn to that ... "
Rowe also is concerned about the transmission system, which is key to serving NorthWestern customers around Billings.
The company leaders took turns emphasizing the importance of the jobs both the power plant and nearby coal mine create in the community of Colstrip, though none talked about what happens to those employees if and when the older two units shut down.
"We all recognize this is an incredibly complex issue," Harris said. "We're not just dealing with megawatts, we're dealing with a community, our employees, the future of that community."
The companies involved are trying to be as transparent as possible, she said. "What's important is we continue to look forward, we continue to look for opportunities, we continue to address the challenges one by one. I know we are all up to that challenge of what is the secure and safe transition for these units."