Major Colstrip owner to buy hydropower from Western Montana tribes

Major Colstrip owner to buy hydropower from Western Montana tribes

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A major owner of Colstrip Power Plant has signed a 15-year contract for Montana hydropower from Energy Keepers, which is owned by the Confederated Salish and Kootenai Tribes.

The agreement announced this week means that Puget Sound Energy will draw 40 megawatts of baseload power from Selis Ksanka Qlispe hydroelectric project, which involves a Flathead River dam. The contract is for 15 years. The duration extends a full decade after 2025, the final year Puget will deliver coal-fired electricity from Colstrip to its western Washington customers.

Washington utilities face a 2025 deadline to stop billing customers for cost associated with coal power. The deadline was brought about by the state’s Clean Energy Transformation Act, which requires that Washington electricity be free of greenhouse gas emissions in 2045.

Cutting coal power is the first step. Energy Keepers is benefiting from coal’s wind down. Travis Togo, the company’s chief commercial officer, said the deal with Puget was struck in February. Puget began receiving power from Energy Keepers at the beginning of March.

Since acquiring 202-megawatt Kerr Dam in 2015, Energy Keepers has been picking up most of the “large customers” in the Montana area, meaning the large energy buyers like hospitals, bitcoin mines and manufacturers, that purchase large loads of power on contract directly from power plants.

“In the state of Montana, there’s about 21 large loads. And they’re collectively referred to as the large customer group, and in the industry we refer to them as the Montana network loads,” Togo said. “And now we serve about 14 of the large loads. Most of the large loads are served by Energy Keepers, and in the future I imagine they all will be served by Energy Keepers.”

There’s no shortage of power in the West, Togo said; the market is very competitive.

Several of those large customers previously bought electricity from Talen Energy, which sells Colstrip power on the open market. Much of that Colstrip electricity came from the power plant’s Units 1 and 2, which were co-owned by Talen and Puget Sound Energy. The units were declared uneconomical last year and shut down in January. Increased operating costs, coal expenses and a difficulty competing with energy generated by natural gas and renewable resources were cited as reasons the units were closed.

Puget is aggressively cutting its coal ties. The Bellevue, Washington, utility has agreed to sell its 25% share of Colstrip Unit to NorthWestern Energy, pending regulatory approval. In addition to facing a 2025 deadline, Puget says Unit 4 is also becoming more expensive, as coal prices and operating costs increase. The unit is also in need of major repairs. Puget says the superheated section of the Unit 4 boiler is damaged and needs a $20 million repair, which Puget and three other Colstrip owners have refused to pay for the past two years.

The sale depends on Washington utility regulators signing off, as well as Montana’s Public Service Commission pre-committing NorthWestern’s Montana customers to paying for future costs associated with the Puget share. Many of those costs haven’t been revealed to the public.

“We are excited to partner with Energy Keepers to bring more clean energy to our customers in Washington state,” said PSE Senior Vice President and Chief Strategy Officer, David Mills. “This agreement is another step in our effort to create a better energy future.”

The Energy Keepers announcement comes a week after Puget signed an agreement for 100 megawatts of surplus hydropower from the Bonneville Power Administration starting in 2022. Bonneville earlier announced that it’s making more hydropower available to regional utilities. Puget is the second Colstrip owner to enter and agreement with BPA in recent years.

There will be coal power in Puget’s portfolio for the next few years. The utility plans to buy Unit 4 Colstrip power from NorthWestern, basically purchasing half of the electricity it now consumes from from the unit through 2025. Puget also owns 25% of Colstrip Unit 3.

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