Colstrip Power Plant owners seeking to bill customers $15.4 million for replacement power associated with the 2018 summer shutdown of its two major units have been rejected in Washington state.
Regulators on Friday faulted the three Colstrip owners, Puget Sound Energy, Avista Corp. and PacifiCorp, for not revealing the decisions made by power plant owners leading up to a shutdown that lasted 77 days, during which Colstrip Units 3 and 4 ran only for testing.
Basically, the owners were asked to prove they’d done everything they could to avoid the $15.4 million in costs they now wanted to pass on to customers. When the utilities didn’t produce the details over several months, Washington’s Utility and Transportation Commission rejected the request.
“The companies have failed to prove that these costs were incurred prudently,” wrote Commissioners Dave Danner and Ann Rendahl. A third commissioner, Jay Balasbas dissented.
“We determine, therefore, that ratepayers cannot be expected to bear the burden of the costs incurred by the companies to procure replacement power after the 2018 Colstrip outage when the record lacks sufficient evidence of prudent decision making leading up to the outage,” commissioners concluded.
The ruling comes as Montana’s largest monopoly utility, NorthWestern Energy, attempts to recover its own replacement power costs, while also seeking to buy more of the Colstrip unit that performed the worst in 2018. Unit 4 began showing emissions problems as early as February of that year.
NorthWestern Energy, the largest monopoly utility in Montana, spent nearly $7 million buying replacement power in the summer of 2018, which it is asking permission from Montana’s Public Service Commission to pass onto its 374,000 Treasure State customers. It is also asking the PSC to pre-commit customers to covering expenses associated with Puget Sound Energy’s 25% of Unit 4. Puget tells regulators it can sell its Unit 4 share to NorthWestern for the aggregate price of $1 and still save customers $24 million to $48 million by getting out.
NorthWestern is several months behind the Washington utilities in its request to recover costs related to the shutdown.
The units were turned off in late June 2018 after tests revealed both were violating federal Mercury Air Toxics Standards in the second quarter of the year. High summer energy demand was kicking in as air conditioners turned on in Montana and across the Pacific Northwest, which meant the owners of the power plant had to buy replacement power on the open market at a time when electricity prices were high.
The Washington utilities racked up $15.4 million in replacement power purchases.
For Washington regulators, the question was whether the power plant’s summer of malfunction could have been avoided. Unit 4 had been just under the pollution limit threshold from mid-April through mid-July of 2017. Then, in February 2018, Unit 4 crossed the limit of .030 pounds per million metric British thermal units. The pollution levels remained high for the next seven months.
June testing then revealed Unit 3 was malfunctioning, at which point, both units were shut down, running only for testing during the next 77 days as operator Talen Energy attempted to figure out what was going wrong.
The February reading should have been a signal to the Colstrip owners that something was wrong with the units, according to Washington’s Utility and Transportation Commission. Until January of this year, Colstrip was a four-unit coal-fired power plant and Units 3 and 4 were its better environmental performers. As a whole, the power plant often passed emissions requirements because good tests from Units 3 and 4, and sometimes Unit 2, pulled down the average for the entire plant, resulting in a passing grade.
But February was different.
“Whereas in the past Units 3 and 4 had tempered the site-wide result with their comparatively low emissions rates, the (first quarter MATS) testing results for Units 3 and 4 were higher than had ever been recorded for those units,” the commissioners wrote.
A WUTC investigation into the matter had raised more questions than answers. Investigators questioned a decision by Talen Energy to burn coal from a different section of Rosebud Mine. They noted that a “coal refining” company, Tinuum Group, was setting up shop to attempt to lower pollution emissions by treating the coal before it was burned.
The Colstrip owners not only revealed little about their discussions with power plant operator Talen Energy, which is also a co-owner of Colstrip, but they also the told investigators there was no reason for early action. The blended average of emissions tests on the coal-fired units was in compliance in February.
In the end, Units 3 and 4 came online again in 2018 after weeks of the testing and tweaks by a plant operator that couldn’t quite identify the problem.
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