A recent settlement proposal filed with the Washington Utilities and Transportation Commission is a major step toward ensuring that adequate funds are allocated for the eventual decommissioning and remediation of the Colstrip Generating Station. The settlement, reached in the Puget Sound Energy rate case, also provides for $10 million in community transition funds to be allocated by Puget, including $5 million from its shareholders.
For decades, Puget ratepayers have not paid toward eventual decommissioning and remediation costs for the Colstrip units and have contributed too little toward capital costs. Knowing now that Units 1 and 2 will close no later than 2022, Puget needed to find alternative funding sources for the cleanup and capital costs of those two units. The proposed settlement offers a solution to ensure funds for these purposes.
In order to ensure that these cleanup costs, as well as capital costs of the plant — namely, the initial investment to build them — are recovered by customers during the lifespan of the units, Puget also agreed to accelerate the depreciation schedule of Units 3 and 4 to December 31, 2027.
Generally speaking, utilities and the commissions that regulate them try to align depreciation — the date when capital costs are paid off — as closely as possible with the end of the life of the unit. This saves customers from paying for something they’re not using. Furthermore, consumers who use the plant should pay for the plant. In this case, the settlement proposes to have Puget customers pay off Units 3 and 4 by the end of 2027.
People can (and will) argue about what that 2027 date means. Meanwhile, there is a lot of work to be done. As proposed by the NW Energy Coalition, Renewable Northwest and NRDC in rate case testimony and agreed to by a diverse set of stakeholders, including Washington industrial customers, the Sierra Club, low-income advocates and the state of Montana, Puget will participate in a community transition stakeholder process while providing $10 million for worker and community transition.
Our hope is that other utility owners make similar commitments. Who, where, when and how this process takes place is still yet to be determined, but it’s an important first step in finding economic development solutions for the people of Colstrip and the state of Montana.
With only a few years until units 1 and 2 are retired, a worker transition plan is sorely needed. We must also address leaking coal ash ponds and Colstrip’s drinking water. Finally, stakeholders need to develop a long-term plan to ensure Colstrip is ready for the eventual closure of Units 3 and 4, whenever that may be.
We should also seize economic opportunity by developing renewable energy in eastern Montana and across the state. That means making sure the Colstrip transmission line is ready to take Montana renewables to markets. A recent Northern Tier Transmission Group (NTTG) study found that renewable energy replacement on the Colstrip line is indeed feasible and numerous projects, including wind, solar, and even geothermal, are being explored.
The Puget rate case settlement, hopefully to be approved by the Washington UTC soon, certainly provides some direction and clarity on the path forward for Colstrip. Now it’s our turn here in Montana to truly chart the course. The choice is ours — we can argue or we can get to work. I suggest the latter.