Washington utilities regulators say they do not have enough information yet to show that Puget Sound Energy’s continued use of coal-fired electricity from Montana is justified — or not — over the long term.
In a letter to the privately owned utility that operates in most Western Washington counties, the Utilities and Transportation Commission said last week that PSE’s analysis of its energy and investment needs came up short and is inconclusive when it comes to its investments in four power plants at Colstrip, Mont.
The regulatory agency said it wants to see more analysis that considers the likelihood that carbon fuels will carry some kind of carbon cost — whether via regulatory action at the federal level or some other means.
PSE owns 50 percent of two 1970s-era power plants at Colstrip and 25 percent of two others built in the 1980s, and it is facing decisions about new investments in the next few years to meet environmental regulations.
“Really, all we’re asking Puget to do is give us some more analysis. We thought some of the assumptions they used — with regard to projected load growth, assumptions with regard to carbon cost — were in need of further analysis,’’ commission chairman David Danner said in an interview. “We’re not saying it’s cost-effective. We’re not saying it is not cost effective.”
What the UTC letter does mean is that the utility must provide better information before moving ahead with additional investment in the coal-fired electrical plants it owns in Montana — or deciding eventually to shut them down.
“It’s clear to us the commission wants to develop a process to review in advance any major investment decision in Colstrip. We very much look forward to working with the UTC to develop that process,” PSE spokesman Grant Ringel said.
Ringel said PSE omitted carbon costs from its plan based on its best understanding of what the future may bring. “Today there is no legislation — there is no law that assigns cost to carbon, and there aren’t any laws that are currently being debated on that” in the state Legislature, Ringel said.
Washington already is phasing out its last in-state coal plant at Centralia, but PSE still gets 30 percent of its power from coal sources and 17 percent from Colstrip, the company says.
Environmental groups hailed the UTC decision as another step toward reducing Washington’s reliance on electricity generated from coal-fired plants, which is a goal Gov. Jay Inslee and Democratic members of his climate change workgroup recommended recently.
Climate scientists say greenhouse-gas emissions from coal plants are a major contributor to global warming.
“Combined with the governor’s call for a carbon-free electricity grid, the UTC announcement signals that we are no longer at a crossroads — our state is moving down the clean energy path,” Sierra Club spokesman Doug Howell said in a statement.
But Danner said his independent, regulatory agency makes its decisions based on economics and is not an environmental regulator. That means going forward that PSE “has to use the least-cost resources” to meet its forecasted power needs. “That’s what we’re going to be looking for,’’ Danner said.
In its review of the company’s economic plan, which is updated every two years, the UTC noted investments will be needed to meet the federal Environmental Protection Agency’s regional haze rules as well as rules for mercury and air toxics over the next four years.
In a mid-range scenario, the UTC says PSE would need to invest $24.1 million by 2015 another $45.6 million by 2018 in its two older plants. In more expensive scenarios, it could have to invest $130 million by 2015 and $71.1 million more by 2018 in its two older plants.
PSE has contended its lowest-cost option for ratepayers is to continue operating the Colstrip facilities. Ringel said the company has invested heavily in wind farms but that the coal plants save ratepayers “hundreds of millions of dollars” every year on electricity bills as well as providing a steady, reliable source of power.Brad Shannon: 360-753-1688