PGE Agrees to Early Colstrip Closure - Future of Plant Remains Uncertain
Posted on September 23, 2021 by Will Gehrke
Tags, Energy
Portland General Electric (PGE) has agreed to pay off its share of the construction costs of Colstrip power plant by 2025 due to CUB’s advocacy. Colstrip is the last of the coal power plants serving PGE customers. PGE is one of six owners of this plant, and the co-owners do not agree on its future. PGE’s share of Colstrip provides enough power to serve about 300,000 homes in Oregon.
Due to Oregon’s coal-to-clean law, SB 1547, which phases out most coal power in Oregon by 2030, PGE was planning to have customers pay off Colstrip’s remaining construction cost by 2030. In a recent filing, PGE proposed to keep the coal power plant in rates until 2027. Because several of the co-owners have announced that they would like to close the plant by 2025, CUB proposed that 2025 should be the target to get the plant out of rates. CUB was able to get PGE and Oregon Public Utility Commission (PUC) staff to agree with our proposed 2025 payoff date, and PGE publicly announced that they would also push to close the plant in 2025. This agreement is still subject to PUC approval.
Due to Colstrip’s construction costs being recovered over a shorter period of time, $4.5 million in additional annual revenue will be recovered from PGE’s customers within the next four years if the settlement agreement is approved by the PUC. This will not increase the total amount of money being collected from PGE’s customers; it simply accelerates it. Colstrip receives its coal from a single coal mine. Utility coal contracts with a single mine are usually “take or pay” contracts, where utilities either use the coal or pay a fee. Therefore, accelerated closure enables PGE to potentially avoid another expensive coal contract and avoid labor costs associated with operating Colstrip, which would be a benefit for PGE’s customers.
PGE’s support for closing the plant in 2025 aligns the company with other co-owners of Colstrip in the Pacific Northwest. The three other co-owners from Oregon, Washington, and Idaho - Pacific Power, Avista, and Puget Sound Energy - all support the 2025 closure timeline. But the two other co-owners disagree. Northwestern, a Montana utility, and Talen, an independent power producer, want to continue operating Colstrip after 2025. When Colstrip was built in the 1980s, utilities did not expect co-owners to disagree on the plant’s useful lifespan. Due to this conflict between the co-owners and differing state energy polices between the Pacific Northwest states and Montana, CUB expects several legal battles to come in Montana and federal court over Colstrip’s future operation.
One legal dispute is already in motion. Northwestern and Talen appealed for help from the Montana state government to keep the plant operating. The Montana legislature has attempted to pass a few state laws in response to that appeal – one that they successfully passed requires that disputes over the plant’s life be settled in Montana, even though the owners long ago agreed that Spokane, Washington would be the location of any dispute resolution. The Montana legislature is also seeking to penalize utilities that refuse to pay for plant upgrades by charging them a fine of $100,000 per day. Pacific Northwest utilities are challenging these two laws in federal court.
If PGE can close Colstrip by 2025, PGE’s customers will be able to avoid funding another expensive coal contract at Colstrip. It remains to be seen if PGE and Pacific Power will be able to exit Colstrip for the benefit of customers. CUB is hopeful that both utilities can get out of the power plant in 2025 and replace it with clean energy. This will reduce economic risk for Oregon customers and help build the clean energy system that we need in the future.
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09/23/21 | 0 Comments | PGE Agrees to Early Colstrip Closure - Future of Plant Remains Uncertain