Puget Sound Energy agrees to shutter 2 oldest units at Colstrip coal plant

Dive Brief:

Puget Sound Energy and Talen Energy, owners of the Colstrip coal-fired facility in Montana, have reached a settlement with environmental advocates to close the facility's two oldest units by July 2022.
As part of the agreement to shutter Units 1 and 2, Sierra Club agreed to dismiss all of the Clean Air Act allegations against the Colstrip Generating Station.
PSE said the settlement would mitigate financial risks, and help the utility better align with shifts towards cleaner energy sources. Units 3 and 4 will continue to operate at Colstrip, for a combined capacity of about 1,500 MW.

Dive Insight:

Cheap natural gas has been making Colstrip's older units less profitable, PSE said in its announcement, so the utility opted to settle a pollution lawsuit brought by the Sierra Club in return for closing the units.

“Our customers expect PSE to be good stewards of the environment and to keep energy costs reasonable," PSE President and CEO Kimberly Harris said in a statement. "The eventual closure of Units 1 and 2 at Colstrip without the risk of further legal proceedings or additional significant investments in the units to meet regulatory requirements enables us to accomplish both of these goals."

Colstrip Units 1 and 2 are more than 40 years old and are co-owned by PSE and Talen. There are six total owners of the four units, however, and all are part of the settlement.

Units 3 and 4, which are newer and more efficient, were not impacted by the settlement. They are co-owned by PSE, Talen Energy, NorthWestern Energy, PacifiCorp, Avista and Portland General Electric.

Environmental advocates hailed the settlement as a win for renewable energy. Montana Environmental Information Center's Anne Hedges said the agreement provides the certainty needed to begin developing Montana's wind power to supply western markets.

"Those markets are demanding cleaner energy and we have the ability to provide them with a 21st Century energy source," Hedges said. "If we can’t do that, Montana will lose an important opportunity to modernize and diversify its energy system."

Mike Scott, Sierra Club’s senior organizing representative in Montana, said the settlement recognizes that Montana’s energy landscape is changing.

"We want to keep Montana competitive. We have the clean energy potential and a talented workforce to meet these changes head on," Scott said. "This is an opportunity to build clean energy right here at home so customers in Washington, Oregon, California and other states are running off of Montana made energy."

PSE said the settlement would minimize the financial risks as well as signal a new direction to address a changing industry.

"There are increasing pressures on coal today, primarily from new and very inexpensive supplies of natural gas that can produce electricity more cheaply and with fewer emissions than coal," the company said. "In addition to the changing economics of coal, there are shifting policies and regulations on the state and federal levels, including the Environmental Protection Agency’s regional haze plan and Clean Power proposal."

The decision is not a surprise. In May, Talen Energy, operator of the plant, announced plans to stop running it by 2018, telling the other owners they would need a new operator. Talen said the plant was no longer economically viable.

The plant also made news earlier in the spring, when Washington Gov. Jay Inslee (D) signed legislation allowing Puget Sound Energy to begin setting aside funds to pay for the future decommissioning of the two units. He vetoed, however, a section of the law that would have allowed PSE to use those funds if the utility decommissioned the units before 2022.