Puget Sound Energy coal plant sale a bad deal for climate and customers

Today, Puget Sound Energy (PSE) asked the Washington State Utilities and Transportation Commission (UTC) for permission to sell its 25% ownership stake in Colstrip Unit 4 to NorthWestern Energy, a Montana-based utility that intends to run the plant for the next 20 years. A copy of the filing is available HERE.

The sale is likely to increase costs or risks to PSE customers and undermine the purpose of last year’s 100% clean electricity legislation by enabling another utility to continue operating the plant, likely extending its life and adding climate pollution to the atmosphere. Unit 4, which had been on a path to orderly retirement by 2025, emits 5 million tons of climate pollution every year, the equivalent of 1 million cars. NorthWestern currently intends to run the plant until 2042.

Under Washington law, any sale of a power plant must provide a financial benefit to PSE’s customers, but the details indicate that this deal may end up costing PSE ratepayers more than simply retiring the plant by 2025: 

• Under the terms of the contract, PSE is obligated to buy 90 megawatts of Colstrip power from NorthWestern Energy for five years, regardless of whether electricity from other sources is cheaper. NorthWestern has come under increasing scrutiny in Montana for the high costs it charges for power from the aging plant - nearly 3 times the price of electricity from nearby wind farms. PSE recently announced that it would retire Colstrip Units 1 and 2 two years earlier than expected because it was cheaper to buy cleaner electricity on the open market.

• The deal also leaves PSE customers on the hook for the cost of cleaning up after decades of groundwater pollution from leaking coal ash ponds, the cost of which increases the longer the plant runs. Under the terms of the deal, PSE would remain liable for 25% of the clean up bill no matter how long Northwestern chooses to run the plant and how much coal ash NorthWestern generates after PSE no longer owns the unit.

• NorthWestern Energy has indicated that the proceeds it makes from PSE will cover its own clean-up obligations at the plant, which it has neglected to recoup from its customers as PSE and other Colstrip owners have over the years. This amounts to PSE customers subsidizing NorthWestern’s fiscal irresponsibility.

• During the debate over last year’s 100% clean electricity legislation, PSE claimed regional utilities would need three times more electric transmission capacity to meet the 100% goal. Yet, as part of this deal, PSE is proposing to sell its Colstrip Unit 4 transmission capacity, potentially at a below-market price. PSE’s sale of transmission undercuts opportunities to import affordable Montana wind, which is most productive exactly when PSE most needs clean electricity -- the winter. PSE’s planning processes have long favored new fracked gas plants that could be a financial windfall for its shareholders, and the company is helping fund a $1 million fracked gas PR campaign in Washington.

Doug Howell, Senior Campaign Representative for the Sierra Club, issued the following statement:

“This is a bad deal for Puget Sound Energy customers that will add more pollution into the air and create more climate disruption. Rather than handing the keys over to a fossil fuel-friendly utility, it’s time for PSE to do the right thing and help guide the Colstrip plant to an orderly retirement while taking care of displaced workers and reinvesting in clean energy in Montana.”

The UTC will consider whether to approve the sale in the coming months.