Puget Sound Energy may sell part of its Colstrip coal plant

NorthWestern Energy said Tuesday it will seek regulatory permission to acquire part of Puget Sound Energy’s share of the Colstrip Power Plant for $1 as some utilities look to unload their coal-generated power.

The agreement would involve taking over the Washington state utility’s 25% ownership interest in Colstrip’s Unit 4 and also purchasing an interest in the separate Colstrip Transmission System for as much as $3.75 million.

That would boost South Dakota-based NorthWestern’s ownership interest in the power plant to 55% amid questions about the plant’s future.

Customers’ bills are not expected to increase, in part because NorthWestern will not have to buy as much higher-cost power on the open market during peak usage, officials said.

NorthWestern purchased its 30% share of Colstrip 4 in 2008 for $187 million and received permission from the Montana Public Service Commission to charge ratepayers $407 million over 34 years.

Two of Colstrip’s four units are scheduled to be shut down in the coming months as part of a legal settlement. Six companies own shares of the plant’s two newer units, and four of those companies are making preparations for operations to cease as early as 2025.

Under Washington state law, Puget Sound Energy and another partial owner, Avista Corp., must stop using coal power by the end of 2025. PSE also owns 25% of Unit 3 and Avista owns 15% each of Units 3 and 4.

NorthWestern, however, plans for the plant to continue operating past 2040.

NorthWestern said it will seek pre-approval from the Montana Public Service Commission early next year to acquire 185 megawatts of coal-fired power generation capacity. It will also seek approval to sell 90 megawatts of that production to Puget Sound Energy for five years.

After the five years end, NorthWestern would have the option of purchasing another 90 megawatts of capacity on the transmission line, officials said.

The utility will set aside about $5 million in profit from selling power to Puget Sound Energy for environmental remediation and decommissioning costs when Unit 4 is retired, officials said.

The plan set off alarm bells with the Sierra Club on Tuesday.

Sierra Club’s Beyond Coal campaign issued this statement:

“The sale is likely to extend the life of Colstrip, which is one of the largest coal plants in the American West. The plant had been on a path to retirement by 2025, the date by which Washington state utilities that own shares of the plant – PSE, Avista Utilities and Pacific Power – must be coal-free under the terms of Washington state’s recently passed 100% clean legislation. ...

“By selling the plant to an out-of-state utility that plans to burn coal indefinitely rather than guiding the plant to an orderly retirement, PSE is undermining the legislative intent of the state’s clean energy law, which promised reductions in climate pollution from the electricity sector. ...”

The Sierra Club’s statement includes Environmental Protection Agency statistics that show the Colstrip plant was the 11th largest single source of greenhouse gases in the United States in 2018, producing 13.3 million metric tons of carbon dioxide, the equivalent of more than 2.8 million cars on the road for a year.

The Olympian staff contributed to this report.

This story was originally published December 10, 2019 at 2:45 PM with the headline "Puget Sound Energy may sell part of its Colstrip coal plant."