Montana environmental regulators do not have cash in hand to assure the cleanup of Colstrip Power Plant or its coal ash ponds, but are assuring state lawmakers — for the third time in three years — the money is coming.
Department of Environmental Quality employees told legislators Monday the state has about $170 million in surety bonds to assure environmental cleanup occurs. One year ago, DEQ told lawmakers they would have, by November 2019, all of the $400 million to $700 million necessary for Colstrip remediation.
Members of the Legislative Energy and Telecommunications Interim Committee hadn’t forgotten DEQ’s earlier promises and were skeptical as DEQ suggested the money would be secure by the end of June.
“I guess I’m wondering what kind of an assessment that is and if we can be assured you’ll try and maintain that time frame,” said Sen. Jane Ellis, D-Helena. “You may recall I’ve done bills in 2017 and 2019 and I was promised the surety bonds would be in place by the end of 2017 and then by the end of 2019. And neither of those have happened.”
In January 2019, DEQ informed Rep. Dan Zolnikov, R-Billings, that cleaning up Colstrip would cost as much as $700 million. Zolnikov, House Energy Committee chairman, was told in a memo that just cleaning up the ash ponds fed by the power plant would cost $400 million to $700 million. It was the first time numbers had been put to the final cleanup costs of all three ponds.
DEQ now says that it will initially secure $400 million in surety bonds from the power plant owners, but that more money might be needed as the cleanup begins.
“Currently, we have $170 million,” said Jenny Chambers, DEQ Waste Management and Remediation Division administrator. “That includes the plant site remedy, closure for all three facilities, long-term closure after they quit operating, and we will certainly, very shortly, have financial assurance for Units 1 and 2 and Units 3 and 4 pond, in the spring time frame, about $400 million total.”
Chambers and others from DEQ said there were still decisions to be made about the cleanup before the $400 million could be secured.
The life expectancy of the power plant has changed dramatically since cleanup planning started in 2012. Colstrip Power Plant was still fully operational. Its five utility owners, spread across three states, had all estimated the power plant’s useful life to extend into the 2040s. Although a sixth owner, Talen Energy, hadn’t disclosed a similar date, it had also never indicated anything different.
Now, Colstrip Units 1 and 2 have shut down for good. Owners Talen Energy, of Pennsylvania, and Puget Sound Energy, of Washington state, shuttered the units in early January, saying the generators were uneconomical.
Puget and a second Washington utility, Avista Corp, are now making plans to exit Colstrip Units 3 and 4 by 2025, when Washington state climate laws will ban coal power. Oregon-based PacifiCorp and Portland General Electric face similar deadlines.
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NorthWestern Energy, the South Dakota-based company that’s also Montana’s largest regulated utility, says it sees Colstrip Unit 4 operating through 2042, and is trying to boost its ownership share to 55% by buying out Puget.
There’s a concern that if DEQ doesn’t get money up front for cleanup, it will be difficult — if not impossible — to collect from the power plant’s owners in the future, particularly from owners who go out of business. Look no further than Montana Power Company to see how things unexpectedly change, said Anne Hedges of the Montana Environmental Information Center. Montana Power was the legacy Colstrip owner few thought would ever close shop, but it did 20 years ago.
“How is DEQ going to make sure they can really extract money from all of these owners?” Hedges said. “Montana Power doesn’t exist anymore. We see PGE in California, which is facing bankruptcy troubles. Just because utilities exist and are really stable entities in the system we have doesn’t mean they’ll be there forever.”
Talen Energy, which also operates the power plant, has put forth cleanup timelines that extend 60 years and recognize that the power plant complex and ash ponds might not be fully cleaned up in 100 years. Hedges said the money should be collected up front, not as the cleanup goes along.
DEQ officials said they’re working to keep cleanup within a 30-year timeframe.
Lawmaker questioning of DEQ’s assurances didn’t end with Colstrip cleanup. The agency reported Monday that Montana air quality has improved with the closure of Colstrip Units 1 and 2. David Klemp, chief of DEQ’s Air Quality Bureau, said the that air improvements would not only benefit Colstrip, but also free up some pollution room for new industrial activity.
“Roughly 5,000 tons-per-year reduction in nitrogen dioxide; 3,500 tons-per-year reduction of sulfur dioxide; 100 tons-per-year reduction in fine particulate,” Klemp reported. “These reductions should benefit the air quality not only in the area but also in the region. It should help Montana continue to maintain compliance with the state and national ambient air quality standards, and they should also assist the state as we develop some future plans, more specifically the regional haze plan, which will be due sometime in calendar year 2021. Reduction in hazardous air pollutants, most notably mercury. That’s identified as roughly 28 pounds-per-year emission reduction from the closure of Units 1 and 2.”
But Rep. Denise Hayman, D-Bozeman, questioned whether the pollution necessary to produce energy for customers of Units 1 and 2 wasn’t just being emitted from the smokestack of another power plant in the region. Talen Energy owned half of each unit. Its customers were mostly of the large industrial variety. Those businesses are still operating, but they get power somewhere else now, Hayman said.
“I don’t see how you can say, ‘Well in this one location, there is a reduction, therefore others can come in and fill that air pollution threshold,’ when we know in other places in Montana energy is being purchased and there is air pollution connected to that purchase,” Hayman said.