Senate budget drops sales tax break on coal for Centralia power plant

OLYMPIA - A sales tax break on coal purchases for the TransAlta power plant in Centralia is eliminated in the state Senate budget released Tuesday.

However, the budgets released by the House and Gov. Chris Gregoire retain the tax break estimated at $4 million to $5 million a year for the Calgary-based energy company.

Environmental groups hailed the attempt by the state Senate to close a corporate tax loophole that benefits the state’s largest stationary source of pollution, including carbon dioxide, mercury and nitrogen oxide, which is a source of haze.

“As Washington faces the biggest financial crisis in state history, it is unconscionable to think that our state’s most harmful polluter should be allowed to continue receiving tax breaks,” said Doug Howell, a senior representative of the Sierra Club’s Coal Free Northwest Campaign.

TransAlta officials took exception with the Senate bid to ax the tax break.

“The tax exemption was part of a fair and reasonable process that helped us invest $200 million in pollution control equipment at the plant,” TransAlta spokeswoman Marcy McAuley said. “It’s an ongoing investment.”

The tax break was approved by the state Legislature in 1997, three years before TransAlta bought the plant. It required the plant owner to:

 • Make reasonable progress investing in equipment to control sulfur dioxide and nitrogen oxide pollution.

 • Rely on its Centralia coal mine to supply 70 percent of the coal burned at the plant.

In 1999, three coal companies in Montana and Wyoming challenged the 70 percent requirement, claiming it violated the interstate commerce clause of the U.S. Constitution.

In 2000, the state Legislature eliminated the 70 percent requirement but kept the tax break in place.

In 2006, TransAlta closed the coal mine, laying off more than 600 workers.

The Sierra Club said state savings from eliminating the tax cut should be funneled into green energy projects for displaced coal miners and workers.

John Dodge: 360-754-5444