12 March 2017
Who should pay for Colstrip's decommissioning costs?
At E-City Beat today, Public Service Commission Vice Chairman Travis Kuvulla (R-Great Falls), has a thoughtful essay on the costs, financial and human, of closing Colstrip Units 1 and 2. Built more than 40 years ago, the coal fired power plants, each rated at 307 megawatts, are scheduled to close no later than 2022.
The immediate cause of the shutdown is the settlement of a lawsuit brought by environmental groups. But the plants’ age, the inherent dirtiness of coal, and the declining economic viability of coal fired electricity, are factors that would have led to a shutdown sooner than later.
Built in the mid-1980s, Colstrip Units 3 and 4, each rated at 740 megawatts, will continue operating. Therefore, not all Colstrip related jobs will disappear when Units 1 and 2 shut down.
But as Kavulla observes, decommissioning Units 1 and 2 will produce significant adverse economic consequences for the coal workers and their communities.
A plant closure means an instant reduction in property values, a cost shift to the remaining taxpayers in the county, and a lot of stranded assets in the form of local government projects that still have outstanding balances on their bond arrangements. The cost of all of these consequences of the plant closure are things the legislation includes within its definition of “decommissioning costs.” In other words, if the legislation becomes law, the power plant owners will have, among other things, the obligation to pay out howeowners and small businesses who find themselves underwater in their mortgages.
In Planning for Montana’s Energy Transition, Headwaters Economics, in a report released in February, 2016, puts numbers on the situation:
Using the latest available data (2013), coal employment is especially important in Rosebud, Big Horn, and Musselshell counties. In Big Horn County coal mining and coal burning employment is 31 percent of the workforce while these sectors account for 30 percent of all workers in Rosebud County and 20 percent of all workers in Musselshell County. For the other counties, coal employment is relatively less important, reflecting roughly one percent of total employment for Richland County and a lower share in Yellowstone County. .
Trying to mitigate these impacts, Sen. Duane Ankney (R-Colstrip), a former miner who fights as hard as any man alive for the miners he represents, has introduced SB-338, which would require the owners of the coal mines and coal fired power plants to pay into a decommissioning fund. He puts no price tag on the bill, and the fiscal note is not available, but the Great Falls Tribune estimates that SB-338 would provide approximately $40 million for decommissioning. Given the magnitude of the decommissioning impacts, that not nearly as much money as will be needed. The bill will be heard on 16 March.
At this point, I’m leaning toward supporting the bill. It’s wrong to let coal companies strip the wealth from the earth, wrecking the landscape and despoiling land and water, without requiring that they invest in the rehabilitation of the communities and workers’ lives their greed has impacted. Instead of letting Talen, et al, take the money and run, Montana should take money from Talen before running Talen out of the state.
A second response to the shutdown of Units 1 and 2 is Butte Democrat Rep. Jim Keane’s announcement that Speaker Austin Knudsen (R-Culbertson) will introduce legislation authorizing the state to loan the operators of Units 1 and 2 money to keep the old plants from closing before 2022. Keane rightly admits that may not be the best solution, but he wants to do something. Understood. Keane has a storied history of fighting for what he thinks is best for Butte. But instead of using taxpayer dollars to prop up greedy energy companies, he should find money to help the workers who will suffer from the shutdowns.