Colstrip coal units to close early as operator blames fuel supplier

Dive Brief:

Two of Montana Colstrip's four units will be shuttered early, plant operator Talen Energy announced Tuesday.
"Financial challenges" with fueling costs forced the early retirements, according to Talen, which owns the two units jointly with Puget Sound Energy. Both units, totaling 614 MW, were scheduled to retire by 2022, and will now permanently shut down by December 31.
The other two Colstrip units are scheduled to shut down by 2035 or sooner, and the plant was the subject of a controversial "Save Colstrip" bill introduced earlier this year which would have allowed NorthWestern Energy to take an additional 150 MW share of the plant. The bill failed to pass the state's House in April.

Dive Insight:

The failing economics of coal continue to plague the industry as cheaper alternatives such as natural gas and renewables take the market by storm.

Fuel costs for Colstrip were expected to keep rising even as Talen tried to negotiate with the plant's exclusive supplier, Westmoreland Rosebud Mining.

"[W]e have been unsuccessful in making the units economically viable," Talen Montana President Dale Lebsack said in the company's announcement. "Fuel constitutes the bulk of our operating cost, and our repeated efforts to negotiate lower fuel prices with Westmoreland Rosebud Mining ... have been rebuffed. Rather than working with us to keep Units 1 and 2 open, Westmoreland is proposing to increase the units' fuel cost going forward."

Westermoreland Coal and Colstrip's long-standing partnership became strained earlier this year after the coal provider filed for bankruptcy in January, something almost every coal company in the country has done in recent years.

Through its supplier upheaval, the plant was also the center of heated political discussions at the federal and state level, as coal heavy states and the Trump administration continue efforts to save the fossil fuel.

The controversial "Save Colstrip" bill was rejected by the Republican Montana House in April after the Senate had approved the measure in March. And last month, Sen. Steve Daines, R-Mont. called on Department of Energy Assistant Secretary of Fossil Energy Steven Winberg to use federal resources to save the plant.

"You have my commitment," Winberg told him at the time. "We're happy to work with Colstrip and see what opportunities there are to keep it open."

Talen said it will work with stakeholders to ensure minimal impact on employees of the unit. The operator "will look to redeploy affected Colstrip employees to work on Unit 1 and 2 retirement activities or the operation and maintenance of Units 3 and 4."