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Settlement could pave way to retiring 2 units at Colstrip coal plant

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Essential Energy Insights - January 2021


Settlement could pave way to retiring 2 units at Colstrip coal plant

Theowners of the 2,094-MW Colstripcoal-fired plant in Montana on July 12 reached a proposed settlement withenvironmental group opponents that could pave the way to the retirement of thetwo older units at the plant on or before July 2022.

The settlement answers questions about the future of one ofthe last and largest coal plants operating in the Pacific Northwest, a plantthat for some time has had an uncertain fate. The proposed consent decree wouldend litigation against the operation of the other two units at the Colstripplant and would not require any monetary payments from the owners to theplaintiffs.

The two units that would retire are units 1 and 2, whichstarted running in 1975 and 1976, respectively, and have a combined summercapacity of 614 MW, according to S&P Global Market Intelligence data. Theplant's two other units came online in 1984 and 1986 and have a combined summercapacity of 1,480 MW.

Parties to the settlement include the six owners of Colstrip— 's TalenMontana LLC, Puget Holdings LLCsubsidiary Puget Sound EnergyInc., Avista Corp.,NorthWestern Corp.,Portland General Electric Co.and Berkshire Hathaway Energysubsidiary PacifiCorp— and the Sierra Club and the Montana Environmental Information Center.Those groups sued Colstrip in 2013, contending that the plant's emissions hadviolated the Clean Air Act.

An environmental group-supported financial in 2015 said there areeconomic reasons to close Colstrip units 1 and 2. For example, the expirationof power purchase agreements has left the plant exposed to low natural gas andwholesale market prices, the analysis said.

"This agreement provides certainty for addressinggrievous pollution issues and gives the two units six years to go offline,although the market may prove less tolerant of that length of time. Talen's CEOrecently said it will lose millions of dollars operating the plant this yearalone," Montana Environmental Information Center Deputy Director AnneHedges said in a statement."We need a plan for a different energy future."

Much of the plant's power is sold in Oregon and Washington.Earlier this year, the Oregon Legislative Assembly to require Portland GeneralElectric to stop using power from the utility's share of Colstrip by 2035. Alsothis year, the Washington Legislature passeda bill to set up a fund for the decommissioning of Colstrip 1 and 2.Puget Sound Energy supported that bill.

Montana Gov. Steve Bullock, however, has recently he is working with Colstrip'sowners to figure out "creativeoptions for ensuring the continued viability" of coal-fired generation.

The proposed consent decree still needs to be approved bythe U.S. District Court for the District of Montana.