State regulators this week stepped up their activism on the climate front by telling three utilities to reconsider the carbon-emission costs of producing electricity from coal and other fossil fuels.
The Washington Utilities and Transportation Commission directives were sent to Puget Sound Energy, Avista Corp and Pacific Power, which collectively serve more than 1.47 million state customers from a mix of coal, natural gas and renewable power.
The commission asks the utilities to assign a hefty cost to carbon emissions, a pollution source that scientists say is driving climate change.
This would be for planning purposes, and not used to try to justify higher rates. But such an accounting would bolster the financial case for the three utilities to hasten their planned exit from the Colstrip Generating Plant, a major Montana coal plant in which each as an ownership stake.
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“The higher the (carbon) price, the less economic that facility will look, “ said Ken Johnson, a vice president of Puget Sound Energy, which currently forecasts to be off of coal-fired power by the early 2030s.
The heftier price on carbon also would be applied, in the planning documents, to natural-gas power plants, and thus make renewables a more attractive option in the years ahead.
The state commission Monday suggested using a federal carbon-price formula developed under the Obama administration to measure the broad social costs of carbon-dioxide emissions.
The federal analysis considers a range of climate-change related costs, such as coping with the sea-level rise and responding to more extreme weather events. In 2020, that cost is assessed at $42 per metric ton, and escalates to $60 per metric ton by 2040 as the effects of climate change intensify.
Puget Sound Energy already assesses a carbon cost of $27 a metric ton to power produced from Colstrip. But the new, pricier figure would weaken the financial case for generating power from the plant.
The federal carbon-price formula would require even bigger revisions for PacifiCorp. This is the parent company of Pacific Power, which brings coal-fired power to Washington from Colstrip as well as the Jim Bridger Plant in Wyoming.
In planning documents recently submitted to state regulators, Pacifi Corp doesn’t put a price on carbon until 2026 at the earliest, and then pegs that value to $4.76 per ton.
“We will need to gain more experience with how this will work and change our planning,' said Bob Gravely, a PacifiCorp spokesman.
The commission also wants the utilities to take a harder look at other financial risks associated with the Colstrip. They include the poor financial health of the mine operator, Westmoreland Coal Co., which has seen its stock value implode amid mounting debt and the soaring expenses – measured in the hundreds of millions of dollars needed to clean up the plant site where coal ash is stored.
“We are deeply concerned with the direct costs of continued operations of Colstrip Units 1-4 and the magnitude of economic risk of continued investment in those units,” the commissioner wrote in a letter sent to PSE.
The commission’s directive is likely to heighten tensions between Washington and Montana over the fate of Colstrip.
Colstrip has six owners, and they have agreed to shut down two of the four generation units by 2022. There has been no consensus on when the other two units will stop operating.
The power plant, in the southeastern Montana town that bears its name, supports more than 700 jobs in coal mining and power production. It also generates local and state taxes, as well as provides electricity for Montana residents.
The Colstrip plant is a major emitter of carbon-dioxide emissions that scientists say are driving climate change. In 2016, the plant released nearly 14.4 million metric tons of carbon dioxide, a colorless greenhouse gas. That equal to the carbon emissions spewed by more than 3 million cars.
Doug Howell, a Seattle-based Sierra Club senior campaign representative, hopes the commission action will lead to an earlier Colstrip closure, and help head off additional investments in plant operations.
“It’s not economical,” said Howell said.
In Colstrip, many are skeptical of linking coal to climate change, and have rallied around the Trump administration, which has sought to cast doubt on the science that tags fossil-fuel combustion as a major driver of global warming.
But the closure of the first two Colstrip units has spurred new efforts to attract new businesses to the town of some 2,200 people.
“We are working night and day to diversify the economy, said Jim Atchison, executive director of the Southeastern Montana Development Corporation. “We are a one-horse town, and would like to have two or three horses in the barn.”