Several million dollars pledged to help Colstrip transition to a post-coal economy is in doubt after a utility merger was rejected in Washington state.
Washington's regulators, the Utilities & Transportation Commission, Wednesday rejected the merger of the Colstrip power plant co-owner Avista Corp. and Ontario-based Hydro One. In doing so, the Utility and Transportation Commission nullified an agreement that committed $4.5 million to help Colstrip transition to a future without the four-unit power plant.
Avista did not respond to calls from Lee Montana Newspapers after the UTC decision was announced. Other key players in the Avista-Hydro One merger talks were hopeful Avista wouldn’t abandon the Colstrip terms.
“I think they’ll be looking for other avenues,” said John Williams, Colstrip mayor. “I’ve known Avista for a lot of years and worked closely with them when I was with Montana Power. They’re a very reputable company.”
Avista’s pledge of $4.5 million in transition funding followed an earlier commitment of $10 million by Colstrip co-owner Puget Sound Energy. The momentum seemed to favor lobbying for similar contributions from the power plant’s other four owners: Portland General Electric, PacifiCorp, Talen Energy and NorthWestern Energy.
The power plant and its namesake community face significant changes in the coming years. Puget and Talen, which together own Colstrip Units 1 and 2, have agreed to shutter the units within four years. That agreement struck in 2016 settled an air pollution lawsuit brought against the business partners by the Sierra Club and Montana Environmental Information Center.
Puget has also agreed to be financially ready to shutter Colstrip Units 1 and 2 in 2027, as has co-owner PacifiCorp. Avista would have been on a similar track under its merger agreement, which quieted objections from nine different groups, including Sierra Club and the Natural Resources Defense Council. It was NRDC that negotiated the Colstrip transition funding in Washington proceedings concerning the Avista-Hydro One merger.
NRDC attorney Chuck Magraw said he was hopeful Avista’s transition commitment would continue. NRDC planned to argue that an orderly Colstrip transition was still in the best interest of Avista customers, who are obligated to help pay for outstanding debts connected to the power plant.
The Sierra Club also endorsed Avista’s commitment to an orderly transition for Colstrip.
“During the course of this proposed merger, Avista executives and stakeholders all agreed that paying off outstanding debt on the aging, expensive Colstrip coal plant was a smart move for Avista customers. That’s even truer now than it was then,” said the Sierra Club's senior regional representative, Doug Howell, in a prepared statement. “Since the merger was proposed in July 2017, the mine that feeds the plant went bankrupt and the plant’s operator said they didn’t have the hundreds of millions needed to pay for cleanup or economic transition for the community. Escalating maintenance and operating costs at the plant and the rapidly dropping price of clean energy make continued use of Colstrip a risky bet for Avista customers.”
Hydro One was willing to pay $5.3 billion for Spokane-based Avista Corp., but the Washington utility had customers in five states, each with a regulatory board that would have to sign off before the merger could be realized. Montana’s Public Service Commission and Alaska regulators both agreed to the merger earlier this year.
Then, Idaho regulators last month began questioning the Ontario government’s influence over Hydro One. The Canadian province is a 47 percent shareholder in Hydro One. Majority control of the Ontario government changed in the June general elections and with it Hydro One’s stability.
In its Wednesday ruling, Washington’s UTC noted that the Ontario government’s new majority forced the resignation of Hydro One’s CEO and the replacement of the utility’s board of directors. That kind of instability didn’t bode well for Avista or its customers, the UTC concluded.
“Provincial government interference in Hydro One’s affairs, the risk of which has been shown by events to be significant, could result in direct or indirect harm to Avista if it were acquired by Hydro One, as proposed,” the UTC said in its order. “This, in turn, could diminish Avista’s ability to continue providing safe and reliable electrical and natural gas service to its customers in Washington. Avista’s customers would be no better off with this transaction than they would be without it.”
The wind down of Colstrip will continue as other utility owners make plans. In Oregon, Colstrip co-owner Portland General Electric is tapering its coal power use, with 2035 as its end date. PacifiCorp will stop selling coal power to Oregon customers in 2030. The Oregon public, concerned about climate change, demanded two years ago that they stop using coal power.
Additionally, Westmoreland Coal Co., which owns Rosebud Mine, has filed for bankruptcy and has scheduled a January auction of the mine, though a 10-square-mile expansion of Rosebud is also undergoing Montana permitting review.